The auto-enrolment review: key developments

This article is part of
Guide to the auto-enrolment review

The auto-enrolment review: key developments

Auto-enrolment has reached its fifth year since its launch in October 2012.

Already the UK's largest schemes have seen three years' worth of automatic enrolment among workers, with 2018 marking not only the first of the large three-year reviews for the biggest schemes and the start of incremental contribution rises to 5 per cent, but also the deadline for all small and micro-employers.

At the end of 2017, the Department for Work and Pensions (DWP) published its 134-page Automatic Enrolment Review 2017: Maintaining the Momentum report.

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This highlighted the successes of auto-enrolment so far - getting 9m people enrolled into a workplace pension scheme, bringing more women and low-earners into some form of pension saving and getting the UK on target to save an extra £20bn a year into workplace pensions through auto-enrolment by 2019-2020.

The then secretary of state for work and pensions, David Gauke - now replaced by Esther McVeigh - said in his foreword: "We are rebuilding the UK's savings culture.

"And as a pioneer of this shift in workplace pension saving, other countries are seeking to learn from our experience."

But there are changes that need to be made to bring more people into the scope of auto-enrolment, and to address the issues created by the growing gig economy and the rising number of self-employed Britons.

He added: "The government's ambition is to implement these changes to the automatic enrolment framework in the mid-2020s. 

"Over the coming year, we will work to build a renewed consensus to deliver the detailed design and implementation of our proposals. 

"Our long-term goal is that future generations can have confidence in saving through workplace pensions and look forward to greater financial security and independence in retirement."

The below infographic is a snapshot of the key auto-enrolment highlights addressed by the review, based on the research carried out by the expert advisory group behind the review, DWP data and the British Social Attitudes Survey 2016.

Review round-up

Here is a reminder of the main points from the review, some of which will be covered in greater detail in separate articles in this guide. 

1) Package of reforms to increase median and lower earners' pension provision

Pensions contributions will now be calculated from the first pound earned, rather than from the lower earnings limit of £5,876 (in 2017/2018).

The DWP is also removing the 'entitled workers' category which means an extra £2.6bn worth of money would be brought into pension saving. It also aims to improve incentives for individuals in multiple jobs to opt into pension saving because they will get an employer contribution for every £1 they earn in every job.

Graham Vidler, director of external affairs at the Pensions and Lifetime Savings Association (PLSA), comments: "This is an important step on the road to helping people save enough for retirement.