Automatic enrolment to workplace pensions

UKParliament

Today, at 4pm, the Public Accounts Committee will take evidence on automatic enrolment to workplace pensions.

About the inquiry
The government faces significant challenges in ensuring that people have adequate incomes in retirement. People are living longer and fewer have been saving into workplace pension schemes than in the past. Automatic enrolment aims to reverse the long-term decline in the number of people saving into workplace pensions. The Department for Work and Pensions, The Pensions Regulator and The National Employment Savings Trust have worked together to introduce the automatic enrolment programme, doing so successfully for large and medium-sized employers who account for around 20 million workers. They now face a greater challenge as 1.8 million smaller employers are required to enrol their workers by 2018. Programme spending is so far on track and opt-out rates have been lower than expected at between 8% and 14%. This inquiry looks at the risks of registering smaller employers and how DWP ensures that more widespread enrolment translates into higher retirement incomes.

Witnesses
The Committee will be hearing from the following people

Mike Cherry, Policy Director, Federation of Small Businesses
Kay Carberry, Assistant General Secretary, Trades Union Congress
Robert Devereux, Permanent Secretary, Department of Work and Pensions
Charlotte Clark, Auto-Enrolement Senior Responsible Officer, Department of Work and Pensions
Charles Counsell, Executive Director for Automatic Enrolment, The Pensions Regulator
Helen Dean, Chief Executive, National Employment Savings Trust

Watch
You are able to watch the session live or catch-up via Parliament TV.

UKParliament

The House of Commons Public Accounts Select Committee has produced a report on automatic enrolment to workplace pensions.

The Public Accounts Committee finds the Department for Work and Pensions has successfully implemented auto-enrolment for larger employers, but "the real test is still to come" as smaller employers enrol staff between 2016 and 2018.

The Committee is concerned the Pensions Regulator cannot yet access real-time information that would aid this roll-out, and highlights the "potential burden" on smaller employers.

Report summary

Since the introduction of automatic enrolment in October 2012, almost all larger employers have enrolled their workers in a workplace pension, thereby increasing the number of people saving for retirement. Employer compliance has been high and the proportion of people choosing to opt out from automatic enrolment has been lower than expected.

The Department for Work & Pensions, the Pensions Regulator and the National Employment Savings Trust and other pension providers are now facing the more difficult task of supporting 1.8 million small employers through automatic enrolment.

Monitor the experiences of small businesses

They will need to monitor the experiences of small businesses—including 900,000 employers with only 1 or 2 employees—and minimise administrative burdens, while also ensuring that increased enrolment translates into adequate incomes in retirement.

We will be returning to this subject, which is of vital importance to both employees themselves and to future governments as they plan for pensions, and we have asked the Department to update us on progress over the next 12 months.

Chair's comments

Meg Hillier MP, Chair of the Public Accounts Committee, said today:

"Auto-enrolment is entering a critical stage which will affect 1.8 million additional employers and their staff. It is vital people can understand, implement and have faith in the system.

The Department for Work & Pensions must watch and learn from the experience of small employers and ensure easy-to-use tools are in place to support them. At the same time, swift action is required to ensure the Pensions Regulator can access accurate information.

There must be greater clarity on outcomes for employees—for example, those with multiple small pension pots—and also over the substantial loan, funded by the taxpayer, which was used to set up NEST.

Auto-enrolment is a huge undertaking with implications for millions of taxpayers but our Committee does not believe its success or failure can be properly evaluated in isolation.

The Department will in time conduct its own review of the programme and we would stress it is crucial this fully considers the impact of wider reforms that could affect people’s income in retirement.

We will be following the Department’s progress closely over the next 12 months and will expect it to respond effectively to the recommendations detailed in our Report as the roll-out proceeds."

Read the report in full

UKParliament

On Wednesday 10 February from 9.30am, the House of Commons Work and Pensions Select Committee will hear evidence on pensions automatic enrolment.

The Committee will hear from:

• Sara Graff, Taxing nannies
• Katharine Swire, employer of a nanny
• Aileen Broomfield, employer of a carer

Watch the session on Parliament TV.

UKParliament

On Wednesday 24 February, the House of Commons Work and Pensions Select Committee will hear evidence on pensions automatic enrolment from 9.30am.

The Committee will hear from:

At 9.30am

• Ian Cass, Managing Director, Forum of Private Business
• Mike Cherry, Policy Director, Federation of Small Businesses
• James Lowman, Chief Executive, Association of Convenience Stores

At 10.15am

• Yvonne Braun, Director, Long Term Savings Policy, Association of British Insurers
• David Fairs, Chairman, Association of Consulting Actuaries
• Tim Sharp, Pensions Policy Officer, Trade Union Congress
• Thomas Brooks, Senior Policy Researcher, Citizens Advice

Watch the session on Parliament TV.

UKParliament

On Wednesday 9 March from 9.20am, the House of Commons Work and Pensions Select Committee will take evidence from Pensions Minister, Baroness Altmann CBE, and representatives from the Pensions Regulator as part of its inquiry into automatic enrolment.

The committee will consider:

• Engagement with small businesses and penalties for non-compliance
• Master Trusts
• Adequacy of pension saving through automatic enrolment
• Self-employment and pensions

At 9.30am

• Lesley Titcomb, Chief Executive, The Pensions Regulator
• Charles Counsell, Executive Director Auto Enrolment, The Pensions Regulator

At 10.15am

• Baroness Altmann CBE, Minister of State for Pensions, Department for Work and Pensions
• Charlotte Clark, Director of Private Pensions, Department for Work and Pensions

Watch the session on Parliament TV.

UKParliament

The House of Commons Work and Pensions Committee has re-opened its inquiry into pensions automatic enrolment after concerns raised over Lifetime ISAs (Individual Savings Account), their level of compatibility with auto-enrolment and the impact they could have on opt-out rates.

The Committee will focus on the following areas:

• To what extent is the Lifetime ISA compatible with auto enrolment and the Government’s wider pension strategy? What impact could the introduction of the LISA have on opt-out rates?
• To what extent will the LISA fill gaps in retirement saving among the self-employed? Are there more appropriate alternatives?
• Which groups would be better/worse-off saving into the Lifetime ISA than they would be under auto enrolment?
• What kind of guidance should be made available to help young people choose where to save their money?
• What impact will the option of using LISA savings to purchase a home (or potentially "other specific life events") have on pension savings?

Submit evidence to the inquiry by Sunday 17 April to have your say.

UKParliament

From 9.30am on Wednesday 13 April, the House of Commons Work and Pensions Select Committee is hearing evidence on pensions automatic enrolment.

The Committee is hearing from Michael Johnson, Research Fellow, Centre for Policy Studies.

Watch the session on Parliament TV.

UKParliament

The House of Commons Work and Pensions Select Committee has published its report into Automatic enrolment.

The Committee report says the process of automatic enrolment (AE) into employer pension schemes is a "success story", but major concerns have arisen over where those funds are being invested. There are also concerns that the Lifetime ISA financial product will distract from the aim of AE, namely to get more people, saving more, for their retirement.

Read the report in full on the Parliament website.

Committee recommendations

The period of moving 1.8 million small and micro-employers on to AE will be the most challenging phase of the programme, and Government must do everything possible to support this phase:

• the AE campaign - famously featuring a "giant psychedelically decorated furry creature called Workie" - should now focus on the financial consequences of non-compliance, emphasising that AE cannot be ignored
• DWP should provide reassurance to small and micro-employers about where liability will fall if their chosen pension scheme performs badly or fails
• DWP should work with HMRC to expand Basic PAYE Tools to support small businesses in meeting their AE obligations: it must be as easy as possible for small businesses to participate without additional cost.

The report comes as the Committee embarks on a major inquiry into pension regulation and the BHS pension fund crisis. The Committee has called for the inclusion of a Pensions Bill, strengthening regulation of pension funds in the Queen’s Speech next week.

Committee comments

Frank Field MP, Chair of the Committee, said:

"Auto-enrolment has been a tremendous success that will ultimately see approximately 9 million people newly saving, or saving more, in a pension. Crucially now we must do much more to ensure that people’s savings are put in the best possible place, and are secure. To this end, we greatly look forward to seeing a Pension Bill in the Queen’s Speech this week. This is what we and others have been calling for."

Craig Mackinlay MP, Committee Member, said:

"The most important thing now is to support the final 1.8 million small and micro-businesses into AE. HMRC provide free 'Basic PAYE Tools' software to enable smaller employers with up to 9 staff to manage payroll calculations and reporting requirements under the Real Time Information (RTI) regime. It is essential, in my view, that additional functionality be added to this application to enable smaller employers to manage their Auto-enrolment obligations without needing to outsource their payroll function or be forced to buy proprietary software."