The ABI has submitted its response to the Department for Work and Pensions’ Workplace Pension Reforms Review.  Commenting on the main findings, Maggie Craig, the ABI’s acting Director General said:

“The ABI fully supports automatic enrolment into workplace pensions, which needs to be implemented without delay.  This is vital to tackling the chronic lack of saving for retirement, and helping thousands of people avoid a dramatic drop in income and living standard when they retire.  The insurance industry will continue to work with the Government to help make automatic enrolment a success, such as giving employers a simple method of certification for existing good pension schemes.  However, as things stand, it is unlikely that the private pensions industry could replace NEST.”

“To make sure only those who can afford to save are included, only people earning £10,000 and over should be automatically enrolled. But those earning less should be allowed to opt-in.

The Government needs to make it as easy as possible for employers who already contribute generously to good pension savings for their employees to continue to do so. This is why contributions should be based on basic earnings from £1 – not a complex formula. If the basic pay method is not used, it will result in many employers abandoning existing good pension schemes and contribution levels, and moving to the easy option of minimum mandatory contribution levels. If this happens, it risks resulting in many people saving less for retirement, not more.

As things stand, it is unlikely that the private pensions industry could fill the gap if NEST did not go ahead. But we look forward to helping employers who want to offer their employees more generous pension arrangements than they can provide through NEST; and to helping the Government make automatic enrolment a success.”

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Notes

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2.        The ABI is the voice of the UK’s insurance, investment and long-term savings industry. It has over 300 members, which together account for around 90% of premiums in the UK domestic market.  The UK insurance industry is the third largest in the world and the largest in Europe, helping individuals and businesses protect themselves against the everyday risks they face. It pays out over £230 million per day in pension and life insurance benefits and over £50 million per day in general insurance claims. The industry is an important contributor to the UK’s economy: it manages investments of £1.5 trillion, over 20% of the UK’s total net worth; employs more than 300,000 people in the UK alone; is the fourth highest contributor of corporation tax; and is a major exporter, with one-fifth of its net premium income coming from overseas business. 

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