Pension Minister Dr Ros Altmann At the National Association of Pension Fund's annual conference in Manchester, the government's pensions minister Baroness Altmann spoke about auto enrolment, gave her views on the implementation of it so far as well as looking ahead to its future, including a look at auto escalation.
Speaking about how auto enrolment had gone so far Baroness Altmann was upbeat: "I think the whole programme has always had challenges and we have managed those challenges really well so far." This is no surprise as so far it has mostly been the larger companies in the UK auto enrolling and they have the capacity and access to expertise that many smaller business will not have.
Looking forward, Baroness Altmann remained positive. "The regulator is alive to those issues and we are completely aware of the capacity issues but we believe that it will all be fine. The pension providers have geared up for this big push of new employers coming in. The regulator has got a new website and new material which I think are really good and really engaging. I am not pretending this is easy but we want to make it as easy as possible."
It's the fact that many businesses that are classified under auto enrolment legislation don't class themselves as businesses, and many may not be aware that the legislation applies to them. This includes instances such as families employing a nanny or a person employing a personal carer. Under auto enrolment legislation they are classed as employers and will be required to auto enrol their employee under the legislation.
Auto escalation was another burning issue that was raised. This concerns the automatic uprating of pension contributions payable into a workplace pension scheme. With the current rates (and escalations) being insufficient to offer most savers a comfortable pension on retirement, it is an issue that needs addressing. However, Baroness Altmann seems to have the bigger picture in mind and takes a pragmatic view of the issue:
"We all know that the auto enrolment rates right now are inadequate for providing a decent amount of pension. We all want people to save more, to have more money in their pension but we are just starting on this process and 1.8m of our employers - more than 95 per cent - have not even started yet. If we start talking about huge increases in contributions before they get with the programme we are shooting ourselves in the foot, but I think it is right that we ease the contributions up gently."
Baroness Altmann finished her speech to the NAPF by announcing two new initiative that she will be launching. With so many people now living overseas, the DWP will be gathering a range of evidence to assess what level of pensions advice is needed for those people abroad. The other initiative will be a consultation on guaranteed annuity rates, looking at whether there is a need to simplifying them and looking at ways this can be done.