Work and Pensions Committee

Pension auto-enrolment: update inquiry

Inquiry status: Concluded

Scope of the inquiry

Since 2015 the Committee has had a watching brief on the implementation of auto-enrolment. Its last report in the issue, published in May 2016, concluded that automatic enrolment had been a great success story, but major concerns remained about the infrastructure of pensions regulation, and in particular how the welcome new levels of retirement savings would be invested.

The rollout of auto-enrolment to employers is now complete, and in a follow up one-off session set for Wednesday 23 January 2018, the Committee seek industry views on the maturing auto-enrolment market, and on the further reforms following the 2017 review.

The key issues to be explored now are:

  • Success  of  auto-enrolment: Auto-enrolment  now  covers  all  sizes  of employers and  the  rollout  has  generally  been  viewed  as a success, with opt-out rates lower than initially expected, even after mandatory contribution rates were increased.
  • Further reforms: DWP’s December 2017 review of Automatic Enrolment “Maintaining the Momentum” set out reforms including lowering the age for automatic enrolment from 22 to 18, and removing the lower earnings limit so that contributions are calculated from the first pound of earnings.
  • Transparency and expectations: The Government has noted that while more individuals are saving than ever before, they are not necessarily engaged with or well informed about saving for their retirement. Evidence to the Committee in the previous Parliament indicated that the auto-enrolment contribution rates will not be enough to provide most people with an adequate pension.
  • Regulation: Master  trust pension  schemes are  currently  undergoing  a  process  of  applying  for authorisation from the Pension Regulator to be able to continue operating, but questions remain over TPR’s competency in regulating Master trusts.
  • The self-employed  and  small  employers: Self-employed  workers  are not currently covered by auto-enrolment, which has led to Committee Chair Frank Field expressing concerns about this group’s “lost” pension savings. Small and micro-employers were the last  employers  required  to  auto-enrol  their employees  into  pension schemes, amid concerns over the differential impact of the new requirements and the cost of meeting them on small business.

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