Pensions  

New 'pensions minister' grilled on AE expansion and tax reform

New 'pensions minister' grilled on AE expansion and tax reform
 

Alex Burghart, the new parliamentary under-secretary of state at the Department for Work and Pensions, has suggested he is keen to see auto-enrolment expanded to cover emergency savings pots.

While discussing pensions adequacy at a Social Market Foundation and Pensions and Lifetime Savings Association event on October 3, Burghart was keen to stress that he had only been 'pensions minister' for a week and so his statements should not be read as firm policy intent — in fact, he has yet to be officially appointed to that role, the DWP telling Pensions Expert he remains a parliamentary under-secretary.

The panel, which included fellow Conservative MP Gareth Davies, B&CE director of policy and external affairs Phillip Brown, and PLSA chair Emma Douglas, broadly agreed that auto-enrolment had been a success, but one that had yet to reach its full potential.

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Burghart would not be drawn on the prospect of tax reform in advance of an expected financial statement by the chancellor, Kwasi Kwarteng, in November.

The session followed a report by the Work and Pensions Committee that found 60 per cent of people are at risk of missing out on an adequate standard of living in retirement, with just 39 per cent of households and 37 per cent of individuals on track to meet the Pensions Commission’s definition of retirement adequacy.

Minister ‘sympathetic’ to AE expansion

The 2017 auto-enrolment review made a number of recommendations, including expanding the scheme to those aged 18, and removing the low-earnings threshold. The select committee said it was “disappointing” progress had not been made on implementing the reforms despite them enjoying “almost universal support”.

The committee called on the government to introduce legislation no later than the beginning of the next parliament, expected in spring 2023, and to publish a timetable for consulting on its implementation.

Douglas reiterated the PLSA’s view, which is that - though costs for employers and employees should not be increased during a cost of living crisis - the groundwork should be laid now for auto-enrolment reform to kick in over the next 10 to 15 years.

“For the last five years, the PLSA has been saying that we need auto enrolment saving to be increased and broadened,” she said.

“In terms of increase, we think that everyone currently saving should do so from the first pound of earnings. And this is really especially helpful for low income workers, and that does include many women in part time jobs. If you're earning, say, between £10,000 and £20,000, it will make a massive difference if we can actually start auto-enrolment from that first pound of savings. 

“We're also saying that we need to increase so move that 8 per cent up to 12 per cent, but by the early 2030s; and to split the cost 50/50 between employer and employee.”