The government has published its auto-enrolment (AE) review report – unveiling a range of plans to “maintain the momentum achieved so far”.
The Department for Work & Pensions (DWP) said the review, published this afternoon, has confirmed that AE into workplace pensions is “transforming pension saving for millions of today’s workers” – noting that, by 2018, 10 million individuals will be saving for the first time, or saving more.
It said the review has also confirmed that overall, the framework that has been established for the delivery of AE remains the right foundation for workers, employers and delivery partners – adding that AE duties will continue to apply to all employers, regardless of sector and size.
In response to the review, the government has set out plans to scrap the AE lower earnings limit and extend the programme to 18-year-olds, but not until the mid-2020s.
It said these proposals would set a “clear direction to build a more robust and inclusive savings culture” – boosting median earners’ private pension provision by more than 40% and lower earners by more than 80%.
DWP analysis published alongside the review revealed 12 million workers are currently under-saving even though the majority of employees and employers are contributing at a higher rate than the AE minimum.
The government said it intended to steward debate and develop consensus on the detailed design and implementation approach going forward but noted the following:
* Its ambition is to implement these changes to the AE framework in the mid-2020s, subject to discussions with stakeholders on the implementation approach during 2018/19, finding ways to make these changes affordable, and evidence of the impact of the increases in statutory minimum contribution rates in April 2018 and April 2019. The DWP’s discussions with stakeholders during 2018/19 will allow it to build consensus on the future direction of travel and shape and develop more detailed plans and implementation timetable that can then form part of the formal consultation.
* The government will monitor the impact of the increases in minimum contribution rates in 2018 and 2019 to inform discussions with stakeholders about future contribution rates and also to better understand how costs from changes to AE are shared between individuals, employers and taxpayers.
* It will begin testing targeted self-employment interventions in 2018 with a view to evaluating them in 2019 to inform implementation options and costs, and will examine whether current legislation and/or guidance requires clarification around the eligibility of workers in atypical ways or in non-standard forms of employment to be automatically enrolled.
* The DWP will report on the feasibility study for the Pension Dashboard in spring 2018. The Single Financial Guidance Body will be in place after autumn 2018.
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