Ruston Smith, trustee director at Peoples’ Pension, Jamie Jenkins, head of pensions strategy at Standard Life and Chris Curry, director of the Pensions Policy Institute have been named as the three chairs of the 2017 auto-enrolment review, the DWP has confirmed.
The review will consider the success of automatic enrolment to date, and explore ways that the groundbreaking policy can be further developed. Three themes will be considered as part of this – coverage, engagement and contribution levels.
Minister for pensions Richard Harrington says: “Automatic enrolment has been a huge success but there is still significantly more work to do if we are to set the next generation on a path to a financially secure retirement. This is why I am delighted to announce this expert advisory group who will work closely with government to look at what we can do to build on our success.
Smith, who will lead on providing advice on the theme of engagement, says: “Auto enrolment has been a game changer – over 7.1 million people have been automatically enrolled into a workplace pension so that they have the opportunity to save. I’m delighted to join the advisory group that will be providing advice, insight and challenge to DWP on the review of automatic enrolment, and to lead the group’s work in how best to engage with current and future savers. Simple and compelling engagement will be critical in helping people of all ages make the right choices for their future.”
Jenkins, who will lead on coverage, says: “Auto enrolment has enjoyed unparalleled success so far in helping millions more people start saving for their retirement. The behavioural nudge works.
As it approaches its fifth anniversary, it is a great time to review the coverage it provides. It is crucial that employers continue to play a pivotal role in its success, but that the review also looks at the savings needs of those individuals currently not benefitting. It is a great privilege to take a leading role in this next stage of auto enrolment, and I look forward to working with the Department for Work and Pensions and the many stakeholders to explore the policy options available.
Curry, who will lead on the debate around contributions, says: “I am delighted to be asked to contribute to the review, and I am very much looking forward to helping the Department for Work and Pensions build on the successful introduction of automatic enrolment.
“One of the greatest challenges that we face is in ensuring that individuals save enough to be able to enjoy their retirement, and it is very important that we collect strong and robust evidence on which to base any decisions concerning the appropriate long term contribution levels to workplace pensions.
“The review will look to ensure that workplace pensions continue to meet the needs of individual savers, and employer, while remaining fair, affordable and sustainable for future generations. The department will publish a final report later this year.”
Hymans Robertson head of DC consulting Lee Hollingworth says: “Despite the success, there is a danger that auto enrolment could be creating a false sense of security. 2018 will see contributions increase to 8 per cent. While a rise from 2 to 8 per cent is clearly needed to increase incomes in retirement, contributions could still be below the level required to achieve an adequate pension. It could also present risks. This increased percentage will mean a bigger hit on take home pay packets and as a result, particularly among younger and lower wage earners, there is a real danger that people could start to opt out. It will be vitally important that we communicate how much people need to save to avoid poverty in later life to avoid this exodus.
“The focus should also change for employers, from managing implementation to ensuring that their provider remains appropriate. Master trusts have proven the most popular arrangement. There are currently 87 master trusts, so there is a wide range to choose from and some are better quality offerings than others. This number is likely to fall to less than a dozen and this process will accelerate as a result of the Pensions Bill. The message to employers is therefore to be confident that they are with one of the longer term winners.”
Royal London director of policy Steve Webb says: “The DWP has done well to bring in a wide range of pensions expertise to support the work of the automatic enrolment review. The advisory group has an important job to do in making sure that the review focuses on the big outstanding issues of automatic enrolment and not getting bogged down in the fine detail. The biggest issues that need to be addressed are the inadequacy of the 8 per cent contribution level and the low and falling level of pension saving amongst the self-employed. The review also needs to consider whether levying contributions from the first pound of earnings would be the best way to give a meaningful boost to saving rates among lower earners. If the review does not move things forward in these three areas it will have failed”.