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Pensions minister: Govt won’t rush into auto-enrolment solution for self-employed

The government will not rush into a “single saving intervention” for self-employed workers because such a move could be counter-productive, Pensions minister Guy Opperman says.

In a letter to work and pensions select committee chairman and MP Frank Field, Opperman says testing and understanding what works is critical to any good intervention.

Opperman was responding to a letter from Field that describes the government’s pension policies for self-employed workers as “disappointing” and lacking “ambition”.

The government’s review into auto-enrolment last year said there is no simple and straightforward mechanism to bring the self-employed into pensions.

The review proposed using HM Revenue and Customs’ making tax digital initiative to identify the most effective options to increase pension saving among self-employed people.

It also said targeted interventions would be trialled to see what ones work best.

Opperman reiterates these points to Field and says auto-enrolment worked because sufficient time was taken to design and implement the policy properly.

He says the national insurance contributions solution for the self-employed proposed by Royal London was carefully considered and determined not to be the best option at this time.

This was because not all self-employed people pay national insurance and setting up a system to reclaim any payments would be difficult to design and administer.

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  1. Julian Stevens 21st June 2018 at 9:40 am

    The “success” of AE is due to compulsion and has nothing to do with good design. Its design is an overly complicated dog’s breakfast. It would have been far better if the government had simply outlined basic contribution parameters and allowed employers the freedom to choose their own contract and charge structures for administration and advice, as additional elements of an integrated package. Sure, some packages would be more expensive than others, but employers would be free to switch if they identify a lower cost package elsewhere that they consider would offer better value. What would be wrong with that?

    The government’s endless obsession with costs, the imposition of charging caps and its insistence that advice charges must be billed separately has just made life more difficult for everyone. Why, right from the start, has the government been determined to prevent AE from operating within a free, open and competitive market?

    And, if it wants to encourage more people to save, it should not only stop endlessly tinkering and meddling with the pensions framework, but repeal the LTA (on which subject we never hear anything from Mr Opperman) and reinstate a few optional extras such as Contributions Insurance (WoP) and integrated life cover (the latter perhaps subject to a minimum level of ongoing contributions to retirement benefits).

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