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Ros Altmann: My priorities for 2017 auto-enrol review

Ros Altmann

 

 

 

Through automatic enrolment we are now helping millions of people, many for the first time, to save for their retirement.

The programme has been a great success to date and we remain on track to complete the gradual roll-out of auto-enrolment by 2018.  By then, around 9 million people are expected to be newly saving or saving more in a workplace pension.

However, we are still only a fraction of the way through, with the most challenging phase ahead of us, as Britain’s smallest employers must set up pension schemes in the next couple of years. It will not be until 2019 that the full auto-enrolment minimum contributions are established across the workplace, with contributions needing to quadruple from the current initially low levels. 

The 2017 review of auto-enrolment will be an important step in planning the future for this vital programme in UK pension provision.  I intend to use the opportunity of the 2017 review to consider broadly how best to build on the success so far, as well as improving consumer engagement, coverage and adequacy.

The Government is keen to encourage saving beyond the 8 per cent (of band earnings) minimum, but recognises the need to balance this with the fact that many individuals are not currently saving anything.

Workers need to adjust to saving for the first time and a programme of auto-escalation could help ease people into saving more, rather than mandating higher contribution levels that might drive more to opt-out.

Other issues include how we can extend coverage to bring more low earners and women into scope, in order to help as many people as possible to benefit from the opportunity to save into a workplace pension, as well as ensuring charges are fair and fully disclosed.

I want the review to build further on work the Pensions Regulator has already been doing to make processes easier and ensure that both employers and workers are properly informed about pensions. 

One of the important elements is helping employers understand the implications of the type of schemes they choose for their staff.

A net pay arrangement can force the lowest earners to pay at least 20 per cent more for their pensions than a scheme that uses relief at source administration.

Employers and workers need to understand this, to ensure low earners do not lose out on the tax relief they are due.

And we will look at how we can create a different culture of pension saving through better and more creative financial education and engagement.

This is an exciting opportunity to extend our pensions revolution. I know automatic enrolment can be strengthened and improved and we want to work closely with stakeholders to determine the scope of the review, and to ensure that their ideas and expertise can help our work as we drive it forward.

Baroness Ros Altmann is pensions minister

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Easy when you have the entire state machinery to hand.

    Less so for micro employers.

  2. Sorry Ros, You are a great expert regarding the technicalities of pensions, but rather removed from the everyday realities.

    1. The target cohort do not wish to engage. All they see is a reduced pay packet against an uncertain promise 20 or 30 years hence. Anyway they regard National Insurance as their payment towards their pension.

    2. The small employer regards this as nothing other than a huge pain in the posterior. While larger firms cheer as they can now reduce their pension funding.

    Unfortunately as you are now a government apparatchik you seem to ignore what is staring you in the face. Forcing firms to be benefit agencies instead of concentrating on the day job leads to less productivity, lower profits, less employment in the longer run and the chance of further BHS farragoes. Yes, I know BHS is a final salary scheme, but that doesn’t mean that forcing firms to provide DC schemes won’t lead to future woes.

    The real solution is for the Government to provide a proper state pension. Company and individual contributions can therefore be turned into what they effectively already are – increased taxation. The Government can take the investment risk (and if required increase tax to compensate) and firms can concentrate on their job, while government can concentrate on what is rightly their concern

  3. Christopher Petrie 23rd June 2016 at 8:18 am

    I disagree with the comfortably retired Mr Katz on this subject, again.
    Every week I see people who for the first time in their lives have a savings account. An account into which their employer contributes. Real money. Not a ponzi-style promise such as the state pension where benefits are deferred at a governments whim.
    AE is a godsend for poorer, working people. It’s a shame too many well-off middle class IFAs are too far removed from those people’s world to understand that.

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