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