The Department for Work and Pensions (DWP) has released the terms of reference for its automatic enrolment review, along with details of its advisory group members.
Tasked with the responsibility of supporting the DWP’s review group as part of the 2017 review of automatic enrolment, the advisory group will provide “evidence-based” assistance to the government. But it has been criticised for a lack of diversity.
Chris Daems, director at Cervello Financial Planning, said: “Despite some of the provider representatives being intelligent individuals with a genuine interest in helping automatic enrolment [AE] become a success, they also have specific interests as employees of pension providers.
“I suggest [stepping] outside of the ‘industry’ and listening to voices from a broader base of people.”
Meanwhile, Work and Pensions Select Committee chair Frank Field MP criticised the terms for deferring on any decision to raise the minimum contribution rate beyond 8 per cent.
“Contribution rates of 8 per cent of qualifying earnings will not be enough to provide most people with an adequate pension,” he said.
Others believe that neglecting to commit to a higher minimum is the right move for the DWP. Mr Daems said: “Moving to arbitrarily high contribution levels too early might lead to mass opt-outs.”
Kevin Dunn, senior partner at Leicester-based financial planning firm, Furnley House, suggests that increasing awareness around AE could be a more effective measure than raising mandatory contribution levels.
The 8 per cent minimum – a phased rise from the current 2 per cent – is due to come into force in two years’ time.
Mr Dunn said: “once the dust settles after 2019, when the phasing is complete, there could be a big education piece, with examples of how much to contribute so as to secure a healthy pension pot.”
Interested parties have been invited to voice their opinions on the review’s terms by 22 March 2017.
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