Minimum contributions for workers are set to rise to 8 per cent by 2019

The government is being pressed to defer a decision on increasing pension contribution rates for millions of workers, sparking concerns the UK savings’ gap could worsen.

Minimum contributions for workers automatically enrolled into workplace pensions are already set to rise in phases from 2 per cent to 8 per cent by 2019.


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The government wants to set out a second rise in a review next year but opponents argue it should wait until the automatic enrolment programme is complete before any more rises are agreed.

“We need to start a conversation about where contributions go from 8 per cent but it is better to take stock when the programme is fully concluded and any impact on opt- outs can be taken into account,” said Graham Vidler for the Pensions and Lifetime Savings Association, which represents 1,300 workplace pensions schemes with £900bn of assets under management.

“It is going to be very difficult to reach conclusions if we don’t know how the process of getting people from 2 per cent to 8 per cent has panned out.”

The Confederation of British Industry, the voice for employers, added: ”There is a case for waiting to see the full rollout of auto-enrolment first — especially the effect on the most affected firms of the full contribution rate, at a time when other business costs have been rising.”

Yvonne Braun, director of policy, long-term savings and protection at the Association of British Insures, said: “The review (2017) should not undermine the policy’s success by introducing any short-term changes while it is still being implemented.”

But others urged the government not to delay a decision on contribution rates.

“It is essential that a decision is not pushed back,” said Steve Webb, former pensions minister, who has described the mandatory minimum contributions as “woefully inadequate”.

“If you wait until 2018 or 2019 to make a decision, then it could be 2025-2026 before any recommendation comes into effect,” added Mr Webb, director of policy with Royal London, the pension provider.

Malcolm McLean, senior consultant with Barnett Waddingham, and former chief executive of The Pensions Advisory Service, said he did not see why a decision on contribution levels should wait until after the auto-enrolment policy was complete.

“It is important to acknowledge that the minimum contribution levels are too low and will not deliver the sort of pension income levels that most contributors will need and/or expect,” said Mr McLean.

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