Should Government consider introducing compulsion in pensions?
08 April 2016
This was one of the questions asked in a survey from Professional Pensions. Almost two thirds of the industry replied that the Government should contemplate introducing a rate of compulsion into the pensions system.
People will not save enough unless government forces them to according to 61% of Pensions Buzz's 109 respondents. It was argued this is only way to ensure the pension system works properly as there is a genuine risk of low contributions. A third disagreed and argued any coercion went against freedom and choice and the remaining 6% were undecided.
Another question in the survey asked if the Government should auto-escalate contributions for staff over and above already planned increases. 59% replied yes, for all employees and 23% replied yes, for all employees over the age of 40. The remaining 18% said the Government should not auto-escalate higher contributions, suggesting to wait for people to get completely used to the rates after phasing finishes.
The end of contracting-out was also covered in the research where just under two thirds believe defined benefit (DB) members are not ready to pay the increased national insurance (NI) contributions resulting from the end of contracting out.
Some blamed the Department for Work and Pensions for the debacle while others said it was the responsibility of schemes. One observation was that the lack of communication was down to trustees and employers both thinking it was the job of the other to tell members.
Just 12% believed DB members are ready to payer higher NI contributions. Around a quarter were undecided.
The Policy Team ran a poll in January/February of this year asking the payroll profession if they are aware that FPS submissions will be rejected in 2016-17 if contracted-out categories are used. We received 90 responses, with these findings: