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A Labour government may extend auto-enrolment into workplace pensions for those aged under 22 and earning less than £10,000, according to the shadow work and pensions secretary.
In a speech to the Resolution Foundation think tank, Rachel Reeves said the Labour Party is “considering detailed proposals which could ensure the 1.5 million workers excluded from workplace pensions are able to save for their retirement”.
Paid for by savings from the Department for Work & Pensions budget, a Labour government would apply auto-enrolment to workers earning over £5885, which is the national insurance contributions threshold.
“The Pensions Commission established by the last Labour government set out a plan to help people save into a workplace pension,” she said. “But the government left out 1.5 million people from workplace pensions, including more than a million women in poorly paid work, when they increased the level of earnings to qualify for auto-enrolment.”
However, pensions specialists met Reeves’ speech with caution, in light of the difficulties employers say they face with auto-enrolment.
David White, managing director of Creative Auto Enrolment, welcomed the simplification of categorising workers afforded by Labour’s plans, but he added: “Before we make any changes to the legislation we need to get the policy right and consider the interaction with single tier state pensions – which are currently set in the middle of this earnings band – as well as the charging structures on small pension pots.
“The mandated charging structures the government has set out could obliterate the contributions of lower paid workers. We need to ensure that any changes made benefit the employee whilst making life easier for the employer.”
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