DWP review find automatic enrolment is success story

retired pension planning

The Department for Work and Pensions’ (DWP) has undertaken a review of automatic enrolment to workplace pensions.

Neil Carberry, CBI Managing Director​ responded to the review saying: “Automatic enrolment is a success story. Across the country, more lower earners are saving for their retirement, based on an innovative approach designed and delivered in partnership by businesses, employees, government and the financial services industry.
“Today’s report shows how far we have come, and makes some sensible suggestions about how to evolve the system in future. But much of the original plan is still to be delivered, with contribution rates rising over the next two years. For firms who are facing rising costs across the board – and employees with other legitimate calls on their income – it is right to complete this first phase and let it bed in before making further changes. A timeline of the mid-2020s for new proposals would be sensible and enjoy business support.

“It’s right to take steps to ensure the self-employed can benefit from pension saving sooner rather than later, and the CBI will be happy to help the DWP address this issue.”

Responding to the review, Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), said: “Employers are already seeing the cost of employment rising significantly and by 2019 employer contributions for pensions will triple to 3 per cent. Changes to “banded earnings” and extending the minimum qualifying age will burden small firms with yet more costs, so the Government will need to keep this in mind as it looks to review the system over the coming years. Requiring employers to contribute from the first pound of earnings, will mean that, by 2019, hundreds of thousands of small employers will have to pay up to £180 more per employee each year. For employers in certain sectors, such as care and hospitality, where margins are tight this will really add up.



“On top of these rising costs, the smallest businesses are only now falling into the scheme for the first time. They will be relieved that headline contribution rates will remain unchanged for now.

“Auto enrolment has clearly helped employees to start saving for their retirement, but the self-employed have been left behind and have not been incentivised to do the same. So it’s good to see the Government testing savings solutions for the self-employed. Just a third of our self-employed members are saving into a private pension scheme, so we hope to see new flexible savings options that work for the changing workforce”.