The government has announced a review of the pensions automatic enrolment regime in order to explore ways the policy can be further developed to encourage more people to save into a workplace pension
The Department for Work and Pensions (DWP) said the review will look at existing coverage and consider the needs of those not currently benefiting from automatic enrolment, which includes employees with multiple jobs who do not meet the criteria for automatic enrolment.
DWP will also be reviewing the automatic enrolment thresholds, namely, the earnings trigger, qualifying earning bands and the age criteria; and will look at how the growing self-employed population can be helped to save for their retirement.
In its outline, DWP said there will also be an opportunity to consider whether the technical operation of the policy is working as intended. In doing this, consideration will be given to the level of burden placed on employers, and any policies which disproportionately affect different categories of employers or could be further simplified.
The 2017 review will also examine the automatic enrolment thresholds for triggering saving and the age criteria for when people will start to be automatically enrolled.
The review will be supported by an advisory board, enabling experts across academia and industry to provide insight. DWP will confirm membership of the board and the terms of reference in early 2017. The aim is to publish a report with policy recommendations towards the end of 2017.
Damian Green, secretary of state for work and pensions, said: ‘Saving into a workplace pension allows workers to benefit from both contributions from the government and their employer. New research out today highlights that nearly £82bn was saved into pensions last year, of which almost 60% was contributed by employers.
‘This level of saving has been bolstered by the contributions from employers who have already enrolled their staff. The estimated average amount of contributions for workers of medium or large firms has increased to 8% of employee earnings, four times higher than the current minimum contribution rate.’
Latest DWP figures show that through automatic enrolment almost seven million people have been enrolled into a pension scheme by nearly 300,000 employers. This is expected to lead to around 10 million people newly saving or saving more by 2018, generating around £17bn a year more in workplace pension saving by 2019/20.
DWP has also announced the decision to freeze the automatic enrolment trigger at £10,000 for the 2017/18 tax year. Any eligible workers who earn this amount or more will continue to be automatically enrolled.
