AEGON welcomes today’s announcement by the Department of Work and Pensions of a ‘thorough and speedy review’ of automatic enrolment into workplace pensions. AEGON says the terms of reference for the review mirror the calls made in its Pensions Manifesto published in the run up to the election.
AEGON suggests the speed of the review is particularly welcome as employers and providers need time to prepare for the reforms to avoid further slippage of the 2012 timetable.
The company is also encouraged by Steve Webb’s comment that the review is designed ‘to make sure that it pays to save’.
AEGON has repeatedly argued that concerns about the impact of means testing on pension savings must be addressed if the aim of pensions reform, to get more people saving more money for retirement, is to succeed.
AEGON has previously set out proposals to remove the groups most at risk of losing out through means testing in retirement by restricting the size of the automatic enrolment pool. AEGON proposes that:
· the automatic enrolment trigger should be doubled from £5,035 to around £10,000
· the upper age limit should be reduced to 55
AEGON also suggests that the burden on small businesses and the overall costs of the reforms could be reduced by exempting businesses with less than five employees, at least at outset. AEGON encourages the DWP to look closely at ways to simplify responsibilities for all employers to make it easier for them to implement the reforms.
Kate Smith, pensions development manager, said:
“AEGON has long argued that more needs to be done to reduce concerns about the impact on hard earned savings of means testing in retirement. Removing the most vulnerable groups from automatic enrolment would be a key step in the right direction. That’s not to say these people can’t join if they want, rather the default should be set so they would have to choose to opt in.
“It’s encouraging that the government is looking again at the auto enrolment criteria and plans a speedy review. Employers and providers need time to prepare if the timetable isn’t to slip further and we need to find ways to make it easier for employers to take on their new responsibilities. We look forward to working with the DWP to get a workable solution.”
For further information:
Tel: 0131 549 6798
Mobile: 07740 897527
Pensions Development Manager
Tel: 0131 549 6445
Notes to editors
· Details of the DWP review can be found at www.dwp.gov.uk/policy/pensions-reform/workplace-pension-reforms
· AEGON published it’s suggestions for a review of the automatic enrolment criteria in its Pensions Manifesto: The Pensions Crunch – proposals for change, in April 2010.