The “inadequate” minimum auto-enrolment contribution rate was “deliberately hard coded into the design” of the policy, Pensions and Lifetime Savings Association chair, Richard Butcher, will say as he opens the association’s annual conference today.
Pensions Age has been told exclusively that he will use the opportunity to call on the industry to better understand the average consumer, and to “start to see what we do through the eyes of the saver".
“We must change the way we think and work if we are to get better retirement incomes for all and the high quality tools needed to achieve that,” he will say.
Whilst he will acknowledge that the government’s auto-enrolment policy has been “very successful”, he will say there is still “more work to do to support savers”.
Initial findings from research on ‘generation AE’ – new savers who have been introduced to pensions through auto-enrolment – will be released at the annual conference later today, 18 October.
“We can’t be complacent. We know automatic enrolment isn’t working for everyone and we know it isn’t working as well as it could do. There is more to do,” Butcher will say.
He will discuss auto-enrolment contribution increases, when he says: “The inadequacy of the contributions was deliberately hard coded into the design. They are starting to increase – which we think is a good thing – but not far enough.”
The PLSA’s Hitting the Target report, released in July 2018, recommended an increase to a minimum of 12 per cent of all earnings, to be phased in over the late 2020s, with the employer contributing the same rate as the employee.
Butcher will also highlight the PLSA’s ongoing role as “a ‘sandpit’ for debate”, through open PLSA, the association’s “drive to bring more of [our members] into policy work so that [their] perspectives can become a part of our thinking and, in turn, part of our engagement with the legislators and regulators”.
This year, open PLSA has responded to the Competition and Markets Authority’s investigation into fiduciary management, and the PLSA’s Hitting the Target report.
The speech will also celebrate the PLSA’s success stories over the last year. These include initiatives to improve standards of governance in the defined contribution sector, such as input into the new master trust authorisation regime, and ongoing work on the transaction cost disclosure framework.
In his speech, Butcher will also announce the PLSA is actively working with other industry bodies, including The Investment Association and the Local Government Pension Scheme Advisory Board, to take forward the work of the Institutional Disclosure Working Group.