Pensions - Articles - Aegon issue wish list for Review of Auto Enrolment

Aegon Head of Pensions, Kate Smith comments on today’s automatic enrolment review: “Automatic enrolment can rightly be considered successful so far, but with millions of lower earners and the self-employed finding themselves excluded, further effort is required.

 Encouraging as many people as possible to save sufficiently to meet their retirement income aspirations and to keep pace with employment trends and the huge rise in people working for themselves, pension saving needs to be pushed up people’s priority list. It’s therefore important that the government keeps to the current timetable rather than being seen to deprioritise pension saving.

 “We’re pleased the review will look at strengthening personal engagement, coverage of auto enrolment and future contributions. We need to ramp up engagement and equip people to have the confidence to actively engage with their pension savings, taking ownership and offering them greater access to modern pensions with online tools, signposting guidance and advice.

 “With the changing world of work, more people are falling outside auto-enrolment, as they don’t earn enough in a single job, or are self-employed. This means they don’t benefit from an employer contribution, a valuable boost to pension saving. Pensions policy needs to be future fit so no-one is forgotten. Pension saving should be there as a default for all, no matter how much they earn, across how many jobs, in whatever form of employment. We hope the review will open up pension saving to more people.”

 Aegon’s wish list for the Review of Auto enrolment
 1. Drive up member engagement - focus on member engagement with positive messages about the benefits of long-term savings. The Government should work with regulators, public advisory bodies, providers and advisers to drive up member engagement, and make pensions more visible, for example, by directing savers to online tools.
 2. Encourage auto-escalation initiatives - incentivise employers to implement auto-escalation initiatives, encouraging employees to sign up to higher contributions from a future date, for example, related to a pay rise.
 3. Freeze the earnings trigger - bring more workers into auto-enrolment by freezing the annual earnings trigger at £10,000.
 4. Bring together multiple low income multiple jobs - enable more low income workers with multiple jobs to benefit from an employer contribution by bringing together all their earnings, rather than exempting each all employment where earnings are below the £10,000 threshold.
 5. Make more earnings pensionable - make contributions more meaningful by gradually removing the initial band of earnings on which statutory contributions are not paid.
 6. Make it a condition of auto-enrolment that schemes must top-up non-taxpayers contributions with the government bonus – some trust-based schemes use tax arrangements which discriminate against non-taxpayers by not topping up their pension contributions. (use Relief at Source or compensate members)
 7. Give access to a pensions dashboard - Require all workplace schemes to provide access to a pension dashboard, where workers can see all their pensions, including the State pension, online.
 8. Incentivise the self-employed to make the equivalent of auto-enrolment pension contributions.
 9. Ban employer contributions to LISA - ensure the Lifetime ISA is not allowed to undermine auto-enrolment and with this in mind, continue to ban employer contributions to LISA.
 10. Sign-post advice and guidance services – encouraging more savers to access advice

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