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

Paul_Herring · 17 October 2019 at 7:28AM

We definitely need to move towards mandatory contributions, the question is how?

No, we need to persuade people to voluntarily contribute more with education, not bully them into it by forcing them to do so; or - as you correctly point out - all that's going to happen is they're going to reduce whatever contribution is is they're being forced to make down to 0%.

Which is the opposite of what they're aiming for. Sort of a law of unintended consequence. Except it's so plain to see that it wouldn't actually be unintended.

Malthusian · 17 October 2019 at 11:11AM

AlanP wrote: »

How will be another tax like NI?

Because the auto-enrolment pension fund will be means-tested away.

And no, this won't happen under the current system (with the New State Pension). But unless you're over 60, 50 at a stretch, the current system is irrelevant.

When Labour's turn eventually rolls around there is a significant chance they will decide that it would be unfair for a comrade to have a lower standard of living than another comrade just because the first one opted out of auto enrolment (or was self-employed / part-time and never had a chance to be auto-enrolled) and the second one didn't.

Once means-tested benefits are increased to bring all pensioners up to the minimum acceptable standard - which will be defined as what a low-income worker with a State Pension and an auto-enrolment fund lives on - the auto-enrolment contributions become a tax, because all they achieve is to save the Government money in means-tested benefits.

I do not endorse this theory, I'm just stating what it is. I would not encourage low earners to opt out and take a voluntary pay cut in the hope it gets made up by means tested benefits later. You can only plan based on the system as it stands, and right now an auto-enrolment pension does not affect means-tested benefits because anyone earning one is earning a non-means-tested State Pension which will disqualify them for Pension Credit by itself.

But it is a possibility that has to be considered, and the theory that it will eventually be means-tested away is consistent with the Government's previous actions.

AlanP_2 · 17 October 2019 at 11:47AM

Malthusian wrote: »

Because the auto-enrolment pension fund will be means-tested away.

And no, this won't happen under the current system (with the New State Pension). But unless you're over 60, 50 at a stretch, the current system is irrelevant.

When Labour's turn eventually rolls around there is a significant chance they will decide that it would be unfair for a comrade to have a lower standard of living than another comrade just because the first one opted out of auto enrolment (or was self-employed / part-time and never had a chance to be auto-enrolled) and the second one didn't.

Once means-tested benefits are increased to bring all pensioners up to the minimum acceptable standard - which will be defined as what a low-income worker with a State Pension and an auto-enrolment fund lives on - the auto-enrolment contributions become a tax, because all they achieve is to save the Government money in means-tested benefits.

I do not endorse this theory, I'm just stating what it is. I would not encourage low earners to opt out and take a voluntary pay cut in the hope it gets made up by means tested benefits later. You can only plan based on the system as it stands, and right now an auto-enrolment pension does not affect means-tested benefits because anyone earning one is earning a non-means-tested State Pension which will disqualify them for Pension Credit by itself.

But it is a possibility that has to be considered, and the theory that it will eventually be means-tested away is consistent with the Government's previous actions.

What evidence do you have for any of those assertions?

You start of by talking about "Labour" and end up by talking about "Government's previous actions".

Which is it the Conservative Government or the Labour opposition that are going to do this?

I agree it is a possibility for those who are young at the moment as we have no idea what the pension landscape will look like in 30-50 years time but all we can do at the moment is work within what we have, and at the moment Auto Enrolment is not a tax.

Paul_Herring · 17 October 2019 at 11:52AM

and at the moment

Indeed. Which is what I said in the OP.

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

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