No mention of pensions in Spring Statement

No mention of pensions in Spring Statement

The lack of any mention around the much-awaited policies on auto-enrolment or the overdue green paper on social care in today's Spring Statement has been criticised by experts.

Chancellor of the Exchequer Phillip Hammond (pictured) delivered a Spring Statement speech heavily focused on Brexit, and while some new policies were unveiled, no changes are due on pensions or social care.

Gregg McClymont, director of policy at master trust The People’s Pension, said he anticipated that today’s statement would be overshadowed by the UK’s decision to leave the European Union, but warned "long-term thinking is crucial in pensions policy".

He said: "It’s disappointing that the government didn’t take this opportunity to offer a good news story by undertaking to extend auto-enrolment to the thousands of workers not currently covered by the scheme."

In December 2017, the Department for Work and Pensions (DWP) published its auto-enrolment review, which announced a series of measures the government was looking to implement to bring more people into auto-enrolment. 

This included lowering the age of workers auto-enrolled into workplace pension schemes from 22 to 18 years, and calculating contributions from the first pound earned, instead of the current £10,000 lower earnings threshold.

And while these were only expected to be introduced in the mid-2020s, Mr McClymont warned it was "vital that the government delivers on its promise".

Guy Opperman, minister for pensions and financial inclusion, told MPs in Parliament yesterday (March 12) the government needed to weight up the consequences of the contributions increase to 8 per cent in April, which was why it has not scrapped the auto-enrolment lower earnings limit.

He said: "This is quite a complicated process; it will genuinely take the best part of nine months to go through all the data and get a definitive understanding of where we are on the 8 per cent. At best, I will not know the degree of opt-outs until Christmas.

"It seems utterly wrong for me to seek to change the nature of the legal basis until I have a real understanding of the impact of the 8 per cent increase."

While pensions were absent from Mr Hammond’s speech, social care received a mention, but only to say it would be considered as part of a comprehensive spending review, if the UK manages to broker a deal with the EU before leaving.

Steven Cameron, director of pensions at Aegon, suggested this meant the long overdue green paper was further delayed.

The publication of this paper was originally expected in the summer but has since been pushed back to the autumn, and the government has since hinted the publication could be delayed further due to "unforeseen circumstances".

Several solutions for the care funding problem are said to be on the table, including the ‘Care Isa’ – a capped savings product, exempt from inheritance tax – and a 'care pension', which mixes drawdown and care insurance.

Mr Cameron said: "The government urgently needs to put the future funding of social care on a sustainable footing. Our ageing population deserves clarity on what the state will pay for and what individuals will have to fund themselves, based on their wealth.