Review of automatic enrolment to build on success

12 December 2016

The Department for Work and Pensions (DWP) has announced the scope of the automatic enrolment review which is to take place in 2017.

In a ministerial announcement Richard Harrington, Parliamentary Under Secretary of State for Pensions said that the main focus of the review will be to ensure that automatic enrolment continues to meet the needs of individual savers.

The existing coverage of the policy will be looked at and the needs of those not currently benefiting from automatic enrolment will be considered, for example employees with multiple jobs who do not meet the criteria for automatic enrolment in any of their jobs.

Also under examination will be the automatic enrolment thresholds namely, the trigger and the qualifying earning bands required by legislation (Section 14 of the Pensions Act 2008) and the age criteria for automatic enrolment. The review will also be used to consider how the growing group of self-employed people can be helped to save for their retirement.

The review will be an opportunity to consider whether the technical operation of the policy is working as intended. Consideration will be given to whether there may be any policies which disproportionately affect different categories of employers or could be further simplified.

The review will also include the requirements set in legislation relating to the statutory review of the alternative quality requirements for defined benefits schemes (section 23A of the Pensions Act 2008) and for the certification requirements for money purchase schemes (section 28 of Pensions Act 2008).

An examination of the level of the charge cap, which was intended to take place in 2017, will also be incorporated within this review and will assess whether the level of the cap should be changed and whether some or all transactions costs should be covered by the cap.

In the early part of 2017 the DWP will be engaging with stakeholders from across industry on these issues. Towards the end of 2017 a report will be published setting out policy recommendations.

The review will be an opportunity to strengthen the evidence around appropriate future contributions into workplace pensions. It will also consider how engagement with individuals can be improved so that savers have a stronger sense of personal ownership and are better enabled to maximise savings. The DWP do not expect to make policy decisions on these areas during 2017.

The automatic enrolment review work will be led by a DWP team and supported by an external advisory group. This group, which will be chaired by and made up of experts from within the pensions industry, and those representing member interests and employers, will provide insight and a challenge function to help shape proposals.

In early 2017 membership and the Terms of Reference for this group will be announced.