Personal PensionDec 14 2015

MPs launch auto-enrolment inquiry

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MPs launch auto-enrolment inquiry

The Work and Pensions Committee has today (14 December) launched an inquiry into automatic enrolment.

It has invited written evidence on the implementation of the legislation so far, especially the effects on small and micro employers.

In particular, the committee is looking at how smaller employers plan to mitigate any negative effects and how the Department for Work and Pensions support for small and medium-sized businesses has helped them meet their obligations.

The review will also look at the suitability of the auto-enrolment earnings threshold and minimum contribution rates, along with analysis of delays to the implementation of increases to minimum contributions that were announced in the Autumn Statement.

Committee member and Conservative MP Heidi Allen said that while she was supportive of encouraging people to save for retirement and the concept of automatic enrolment, “I am concerned that some small employers may not have the knowledge or resources to implement the policy”.

Frank Field, a Labour MP and chair of the committee, commented that auto-enrolment is generally perceived as being successful to date, but in the early stages of delivery it was only large and medium sized employers that had to meet these new pension requirements.

“Time has now come for smaller employers, including people who would not consider themselves business people – such as those who employ nannies and carers – to participate.

“We must ensure they are in a position to cope with these new obligations. We will also look at contribution rates and criteria for inclusion in auto-enrolment, to ensure that the right people are defaulted into saving adequately for retirement.”

Written submissions must be received by 3 February 2016.

Last month, the DWP issued its auto-enrolment evaluation report for this year, which showed a rise of employees participating in a workplace pension to 13.9m, a 3.2m increase since 2012.

But while awareness among SMEs may be on the increase, there are potential pitfalls ahead, Hargreaves Lansdown’s head of corporate pension research Nathan Long pointed out. “Awareness is increasing among small and micro employers, but if even 1 per cent of the companies yet to stage do not comply, this is still almost 20,000 employers facing a problem.”

To learn more about automatic enrolment, and earn CPD, read FTAdviser’s ‘Are you ready for the automatic enrolment avalanche?’ special report.