Pensions minister "absolutely wants" 8% auto-enrolment minimum raised

Paul_Herring

https://www.moneywise.co.uk/news/2019-10-16%E2%80%8C%E2%80%8C/pensions-minister-absolutely-wants-8-auto-enrolment-minimum-raised

I'm just waiting for opt-out to be removed as a possibility in a few years, so this becomes another tax like NI...

AlanP_2

How will be another tax like NI?

With NI the gov't take the money and spend it as part of their annual income / expenditure process. In return they pay a SP at Age xx, fund the NHS, the armed forces, local services etc.

With pension auto enrolment you are "forced" to save in to a personal pension pot that belongs to you.

Strange comparison.

MaxiRobriguez

As long as the opt-out is maintained I think it can only be a good thing.

JoeCrystal

Paul_Herring wrote: »

https://www.moneywise.co.uk/news/2019-10-16%E2%80%8C%E2%80%8C/pensions-minister-absolutely-wants-8-auto-enrolment-minimum-raised

I'm just waiting for opt-out to be removed as a possibility in a few years, so this becomes another tax like NI...

I think it is excellent news that he recognised the need to increase the minimum contribution rate, especially 8% is not that sufficient. This is undoubtedly not taxes since you would be able to access the pension schemes on reaching 55 atm.

Paul_Herring

especially 8% is not that sufficient.

People are free to contribute more. That is to be encouraged.

Doing so by making It all or nothing, not so much.

55

Until 2028.

JoeCrystal

Paul_Herring wrote: »

People are free to contribute more. That is to be encouraged.

Doing so by making It all or nothing, not so much.



Until 2028.

And how do you encourage people to contribute more then?

As for 2028, I believe that it was announced but have not done anything about it. There is no legislation in place to increase the age yet and nor have I read any information from the Treasury confirming their intention to do so recently.

ian1246

My wife is 27years old. She works in a nursery, 46hours a week and earns £8.75 per hour. She contributes £160 a month into her pot. Her employer, traditionally, would never have even provided a pension. Thanks to Auto-Enrolment, the employer now pays in around £37 a month, give or take.

Auto enrolment is a great thing. But it needs to go further. A lot of my wife's colleagues earn barely more than £10,000 a year due to being part-time. This means with the current Threshold, they are building up very little pension. Many are only paying the minimum amount as well.

Hopefully in the future the government will remove the Threshold completely & increase the contribution rate to something like 13% (7% employee, 5% employer) over the course of 5-10years.

That way younger generations will have a fighting chance to accumulate decent pension pots.

We're relatively lucky - we ve recognised the need to contribute into my wife's pension a good amount at a relatively early age (she also has a small public sector pension from when a teaching assistant, worth currently £1000 payout a year when she retires). I work full time in the public sector, so have a career average DB Scheme....... but many couples out there are not so lucky. The government doing more can only be a good thing.

LHW99

A lot of my wife's colleagues earn barely more than £10,000 a year due to being part-time. This means with the current Threshold, they are building up very little pension. Many are only paying the minimum amount as well.

I agree with most of your points Ian, however, if those workers are currently managing on £10k pa, then SP plus the small amount of pension they build up may not be very different in total. If it can be lived on now, it could presumably be sufficient at that level going forward.
It does tend to be that those who are used to living on a small income can manage on a lower retirement income than those whose pay brings them into HR rates - and they would be paying in more under AE anyway.

bostonerimus

Personal responsibility is a good thing so I'm all for larger employee pension contributions, but employers and government also have responsibilities so any commitment for increased contributions should be matched by the employer and by the government in an improved state pension and other benefits. That might need the highest tax rate to be increased.

chiefie

Good
And employers, at least the larger ones need to pay more- even 1% more is better than nothing

Triumph13

The worry with increasing the auto-enrollment percentages whilst still having an opt-out is that a larger slice of the population will feel, rightly or wrongly, that they simply can't afford it and opt out. We definitely need to move towards mandatory contributions, the question is how?