Auto-enrolment delay shows Workie hasn’t worked

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Auto-enrolment delay shows Workie hasn’t worked

A delay to the auto-enrolment contribution increases shows the government’s ‘Workie’ advertising campaign has not worked, according to industry experts.

The delay, announced as part of the Autumn Statement, means increases that to the auto-enrolment minimum contribution rate have been pushed back by six months to April 2018.

For Huw Evans, director general at the Association of British Insurers, the delay is disappointing.

“With an ageing population and increasing life expectancy, auto-enrolment can only succeed if people and employers start putting more money into their pension pots, to fund them through their retirement.”

Tom Barton, a pensions partner at law firm Pinsent Masons, said that there will no doubt be questions raised as to whether ‘Workie’ has worked and cynics will also ask whether this is part of plan to keep tax relief spend down – arguing that the less contributed, the less the chancellor hands out in tax relief.

“Is this the start of meeting the Budget surplus by 2020 promise? What next? TEE?

“Perhaps it is better to simply be practical – and acknowledge that we are where we are but there are a few things we now need to do. Employers and trustees will have to have a look at the terms of their scheme and check whether any of the contribution increase dates have been fixed.”

David Fairs, chairman of the Association of Consulting Actuaries, agreed that the chancellor’s decision to save £840m in tax relief paved the way for a fundamental change to the existing tax regime.

“I, like many of my colleagues in the ACA, are now trying to help clients through the challenges of implementing a pensions policy whilst not knowing how much their employees can save each tax year until the very end of the same tax year. Adding further short-term complexity was not what we needed!”

Nathan Long, head of corporate pension research at Hargreaves Lansdown, pointed out that pushing the step up in pension contributions required under auto-enrolment back and aligning to the tax year is good news for the public finances and will be welcomed by employers.

Claire Trott, head of pensions technical at Talbot & Muir, said it was good news that the changes to contribution requirements haven’t been postponed further, while Fidelity International’s head of retirement Richard Parkin said Mr Osborne was enjoying a tax bonus by pushing back auto-enrolment.

“As always, what George giveth, he also taketh away,” added Mr Parkin.