Pension giants call on govt to adopt AE expansion

The self-employed also need support

While there has been some political interest in supporting efforts to expand the scheme, the DWP has been unable to meet these demands.

In January 2022, Conservative MP Richard Holden introduced a private members’ bill to extend auto-enrolment to younger and low-paid workers. It has yet to receive its planned second reading.

However, in the same month, pensions minister Guy Opperman disappointed some in the pensions industry when he declined to offer a timetable on the scheme’s expansion. 

In February, Opperman admitted that the auto-enrolment reform bill will not get through parliament in time for the Queen’s Speech in May.

In addition to supporting the scheme’s expansion, the ABI - in its submission to the Work and Pensions committee inquiry - also highlighted “the problem of not enough self-employed people saving into pensions”, caveating that this may require a separate system. Self-employed workers do not fall under the scope of auto-enrolment.

Long-term participation in pensions among the self-employed has declined over recent years, falling from 21 per cent in 2009 to 2010 to 16 per cent in 2019 to 2020.

The ABI called for the provision of more guidance for those moving between employment and self-employment, including advocating the benefits of pension saving.

It also recommended increasing self-employed workers’ National Insurance Contributions from 9 per cent to 12 per cent, putting them in line with employees.

Will Tanner, a director at Onward who also served as former prime minister Theresa May’s deputy head of policy, said that building out auto-enrolment could help the government achieve one of its flagship policy objectives.

“Extending auto-enrolment to younger and low paid workers would not just help individuals and their families save for the future, it would generate billions of pounds that could be invested in the government’s mission to level up the UK,” he said.

Alex Janiaud is deputy editor at FTAdviser's sister publication Pensions Expert