CompaniesNov 25 2015

Steve Webb hails Osborne’s AE compromise

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Steve Webb hails Osborne’s AE compromise

A six-month delay to automatic enrolment contribution increases may be a good thing, the former pensions minister has claimed.

Commenting on the Autumn Statement, Steve Webb, who joined as director of policy at Royal London earlier this month, said: “It is good news that the rumours of a halt to automatic enrolment have proved unfounded.

“A six month delay, so that contributions rise in April 2018 and April 2019 may be a good thing. If people get pay rises and income tax cuts in April this will mean that the impact of higher pension contributions on their take-home pay will be reduced. If this leads to lower opt-out rates it would be a welcome change.”

In the Autumn Statement, chancellor George Osborne had hailed the fact that more than 5.4m people have so far been auto-enrolled into a workplace pension.

Mr Osborne said: “The government is committed to supporting individuals and businesses through the final stages of its implementations.

“To simplify the administration of automatic enrolment for the smallest employers in particular, the next two phases of minimum contribution rate increases will be aligned to the tax years.”

Instead of taking place in October, they will now occur in April of the following year.

Mr Webb, who was pensions minister from 2010 to Summer 2015, was previously LibDem minister for Thornberry and Yate, added: “It is also good news that a decision on pension tax relief changes has been put off until the Budget. This is an important decision and the Government needs to take time to get it right. However, they should have put on hold the short-term changes to pension tax relief due in April 2016 which will simply make the system more complex.”