Webb: Auto-enrolment ‘last chance on pensions’
Auto-enrolment is the last chance to get mass participation in pensions and it should not be wasted, Steve Webb has said.
Speaking at a Personal Finance Society conference, the work and pensions minister said, “If we blow the chance to get mass pension conversion then it will be lost for decades.
“Yes it is a burden, and bureaucracy and a cost to business but it is for an incredibly good cause,” he added.
He added that recent research shows that the number of people likely to be brought into a pension scheme as a result of auto-enrolment is up from last estimates of 10 million to nearer 11 million, as employers have closed their own schemes or reduced provisions.
Webb said latest estimates show that two thirds of employees have no pension provision at all.
The minister reaffirmed his commitment to auto-enrolment, adding that he is “determined to see it through” and is still planning for micro businesses to be included.
Doubt was cast over whether small firms would be included when their contracting in dates were delayed by a year in November 2011.
Small firms will now not have until 2015 to enrol, but Webb said he believes this will give a chance to learn from any mistakes or stumbling blocks occurred with large business who enrol first.
“Elongated staging plays a big part. If there are wrinkles by the time we get to small employers we will have ironed a lot of them out,” he said.
He admitted that the cost benefit analysis does not look as attractive for smaller businesses, but that this sector includes more than one million employees.
Webb also confirmed that the issue of small pots will be addressed in the next few months, adding that options include consolidation of small pots or them going to a third party.
He acknowledged that with the average person having 11 jobs in their life, there is large potential for pots to be lost or forgotten. He also noted that the larger a person sees their pot get, the more engaged they become, which will not occur if the savings are spread across many pensions.