Pensions Automatic Enrollment

Committee launches inquiry on automatic enrolment

The Work and Pensions Committee has today launched an inquiry into pensions automatic enrolment. Under the Pensions Act 2008, every employer in the UK must put certain staff, unless they choose to opt out, into a pension scheme and contribute towards it. Larger businesses are already require to auto-enroll staff. The requirement is now gradually being applied to smaller employers.

The Committee invites written evidence on the implementation of automatic enrolment and, especially, the effects on small and micro employers. In particular, the Committee welcomes submissions addressing:

• the effectiveness of the automatic enrolment process and lessons learnt so far;
• the impact of automatic enrolment on smaller employers and how they plan to mitigate any negative effects;
• Department for Work and Pensions support for small and micro employers in meeting their automatic enrolment obligations, and any recommendations for improvement;
• the suitability of the auto-enrolment earnings threshold and minimum contribution rates;
• the effect of the delays to the implementation of increases to minimum contributions announced in the Autumn Statement; and
• the interaction between automatic-enrolment and other pensions reforms, including the new state pension and pension freedom.

The Committee particularly encourages small and micro employers and their employees to submit evidence.

Heidi Allen, Committee Member, said:

“As a business owner myself, I know how intimidating auto enrolment can potentially be for the smaller employer. While I’m very supportive of encouraging people to save for retirement and the concept of automatic enrolment, I am concerned that some small employers may not have the knowledge or resources to implement the policy. It is vital we communicate to and support these smaller employers so they can meet the new requirements. I hope this inquiry will help us to review the effectiveness of the current process and make recommendations for improvement.”

Frank Field, Chair of the Committee, said:

“Automatic enrolment is generally perceived as being successful to date, but in the early stages of delivery it was only large and medium sized employers that had to meet these new pension requirements. Time has now come for smaller employers, including people who would not consider themselves business people – such as those who employ nannies and carers – to participate. We must ensure they are in a position to cope with these new obligations. We will also look at contribution rates and criteria for inclusion in auto-enrolment, to ensure that the right people are defaulted into saving adequately for retirement.”