View more on these topics

Warning of compulsion if auto-enrol is a failure

Pensions experts say policymakers will be forced to pursue full-scale compulsion if automatic enrolment fails to significantly boost saving levels in the UK.

Under the Government’s flagship pension reforms, everybody aged 22 or over earning more than £7,500 will be auto-enrolled into a workplace scheme.

However, the Government has stopped short of forcing people to pay into a pension. Instead, anyone who chooses to opt out will be re-enrolled every three years.

The Department for Work and Pensions expects more than 10 million people to be auto-enrolled into a workplace pension scheme between 2012 and 2016.

Barnett Waddingham consultant Malcolm McLean says compulsion will be inevitable if auto-enrolment fails.

He says: “The Government’s attempts so far to overhaul the state pension scheme may not be enough. It needs to start putting together a contingency plan for what can be done should higher numbers than expected choose to opt out of auto-enrolment.

“Should auto-enrolment fail, the next step will have to be full-scale compulsion. This may sound radical, and some initial resistance could be felt, but we already have a form of compulsion in National Insurance contributions and it may be the only way to prepare for, and cope with, a longer living society.

“I would predict that full-scale pension scheme compulsion could be in place in five years if auto-enrolment does not deliver as expected.”

Evolve Financial Planning director Jason Witcombe says: “Automatic enrolment is a massive step towards compulsion anyway. If that does not work, it seems likely that compulsion will happen.

“From a policymaker’s point of view, it would be easier to have compulsion than to tell people that taxes are going to have to go up to pay for a bigger state pension.”


MM Profile: Tom Ilube

The managing director of Callcredit consumer markets is setting up a new service called Noddle which aims to put credit information into the hands of the public and their advisers Interview by Rachael Adams

FSA gets tough on Twitter ads

The FSA is taking a tough stance against financial services firms advertising products on Twitter, forcing firms to remove or amend tweets it deems to be unsuitable. Last week, Money Marketing’s sister publication Mortgage Strategy reported that the regulator has told a number of mortgage brokers to amend or remove tweets on the social networking […]

Working pharm

It may not seem glamorous during these volatile equity market conditions but several managers are relying on traditional defensive plays such as healthcare to see them through. Except these days, managers claim healthcare stocks are not quite the boring old pharma story they may have been in the past. Many such firms have reshaped themselves […]

All nine back rate hold but Posen is sole voice again for £50bn QE2

All nine members of the Bank of England’s monetary policy committee voted to keep bank rate on hold at 0.5 per cent in September, according to the latest MPC minutes. This is the second month all nine members have voted to keep interest rates on hold, which has been at the record low level since […]


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. Instead of forcing people to participate in a retirement savings framework in which they have no confidence, the government would do rather better to start honouring the Conservatives’ pre-election pledge to put right all the damage done over the past 25 years by its various predecessors. Why has this promise been swept under the carpet in the evident hope that everyone would just forget about it?

Leave a comment