The earnings threshold for Nest and automatic enrolment should be £7,500 a year and not £5,035 as originally envisioned, according to media reports ahead of tomorrow’s publication of the review into the project.
A report on the BBC website states the review, headed by Paul Johnson, an economist at the Institute of Fiscal Studies, will call for a £7,500 threshold for Nest. Corporate Adviser understands that contributions could revert to band earnings where earnings exceed £7,500 however.
The review is also reported to propose a three-month grace period before employees are automatically enrolled, with an option for employees to join within that period if they choose.
Johnson was assisted in the review by David Yeandle, head of employment policy at manufacturers’ association the EEF, and Adrian Boulding, pensions strategy director at Legal & General.
The DWP has refused to comment on the report and says that full details of the review will be given in a written ministerial answer to Parliament on Wednesday morning at 9.30am.
Ros Altmann, director-general of Saga says: “If it is true, this makes it better than it was, and the proposal to solve means testing does make a difference, but I can’t support Nest until pension is safe. If we can sort out the safety net, as is being proposed, then it does not have to be pension. I would like to see employers paying into an Isa/pension for people in their 20s to sort their debts out. If the basic foundation is going to be there when they retire, that should change the whole argument.”