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Unacceptable Government regulations put success of pension reforms at risk

The latest batch of regulations to implement the 2008 Pensions Act has been published today. The Act introduces automatic enrolment and mandatory employer contributions into workplace pension schemes from 2012. While the ABI supports the key principle of the Government's pension reform programme - to get more people saving more money for their retirement - we believe that these regulations put the success of the reforms at risk. The regulations:
 

·         Allow for the phasing-in of employer contributions, starting from 1% in 2012, rising to 2% in 2015 and 3% in 2016.

·         State that large employers will have automatic enrolment imposed on them before medium, small and micro employers.

·         Will only be consulted on for six weeks, half the usual consultation period.

 

Maggie Craig, the ABI's Director of Life and Savings, said:

 

"Botched implementation of the Pensions Act will put the success of the reforms at risk. It was always understood that some phasing was necessary, but the four-year delay before contributions rise to 3% is unacceptable. It means that no employer will have to pay more than 1% until October 2015 - the rate of saving for people in the scheme will move at the pace of the slowest. As things stand, employers may be encouraged to ditch private schemes, which benefit from higher contributions, in favour of the state-backed scheme where they could pay just 1% for at least three years, with Government approval. So, at a time when Britain is not saving enough, the crucial first few years of the new system will see less saving.

 
"And the consultation time for these regulations has been arbitrarily cut in half by the DWP, from 12 weeks to just six. We urge the Government to think again on these unacceptable regulations, in the interests of Britain's current and future savers."

-ENDS -


Last updated 01/07/2016