Auto-Enrolment Pensions Review for the Self-Employed
‘The UK’s 4.8 million self-employed workers needed to be encouraged to save in the same ways as their employed peers.’
Earlier this week, Department for Work and Pensions (DWP) announced its plan to push its campaign to get more people saving for a pension with an extensive review of its auto-enrolment scheme in 2017.
Auto-enrolment forces employers to set up a pension for their staff and make contributions on their behalf and, unlike previous schemes, eligible workers are now signed up automatically and must personally opt out if they don’t want to contribute.
Since 2012, more than 7 million workers have been automatically enrolled into a pension scheme by almost 300,000 employers, with both sides obliged to make contributions into a retirement fund. By 2018, this figure is predicted to reach 10 million.
However, there is concern for the self-employed and people who are earning low wages, only working part-time, holding down two jobs that both pay less than £10,000, or are too old or young, as they are considered ineligible for auto enrolment.
Commenting on the review, Parliamentary Under Secretary of State at the Department for Work and Pensions, Richard Harrington stated that ‘the main focus of the review will be to ensure that auto-enrolment continues to meet the needs of individual savers. In doing this we will look at the existing coverage of the policy and consider the needs of those not currently benefiting.’
‘I would also like to use the review to consider how the growing group of self-employed people can be helped to save for their retirement.’
Following Harrington’s comments, Damian Green, Secretary of State for Work and Pensions , ‘Pensioner poverty has more than halved since the late 1980’s, which is a record to be proud of. We need to secure this legacy for future generations.
‘After years of people not saving enough, auto-enrolment is helping millions of people, many of whom are low earners, benefit from a workplace pension. This will continue to boost retirement pots and help safeguard people’s standard of living in later life.‘
In its evaluation report released yesterday, DWP said that auto-enrolment ‘remains on track and has increased workplace pension membership among eligible private sector employees by 37 percentage points’. You can review the report here.
The government is set to appoint an advisory board to support the auto-enrolment review, with terms of reference to be published early next year, so Walker Smith will be closely monitoring its progress.