PLSA 2019: Auto-enrolment is ‘anti women’ and ‘non-starter for self-employed’

Auto-enrolment is “anti women” and the policy is a “non-starter” for the self-employed, according to a panel of pensions experts.

A panel of experts at the PLSA Annual Conference today, 18 October, discussed various topics on financial education, automatic enrolment, the state pension and collective defined contribution schemes.

On the issue of automatic enrolment, financial journalist Paul Lewis said that the policy is “very anti-women”.

“I think auto-enrolment is very anti-women because if you earn less than £10,000 you’re not automatically enrolled and I think that’s a disgrace. I think if you do three jobs on £8,000 and earning £24,000, you’re still not auto-enrolled, that is an absolute disgrace, and I think that affects women quite disproportionately compared to men. That has to change.”

Royal London director of policy Steve Webb said that the issue of multiple jobs could be fixed by HMRC because they have real time information, but HMRC is doing other things related to Brexit.

Lewis also raised the issue of pension contributions because the policy has got everybody saving into a pension but it is an “inadequate pension”. However, Pensions Policy Institute director Chris Curry said the balance between employer and employee contributions is really important.

“One of the big concerns about automatic enrolment is whether people will stop making contributions when you raise the contribution level. If you raise the individual contribution up to 9 per cent and keep the employer contribution at 3 per cent, if the employee chooses not to save they get back 9 per cent. But if you have that the other way round…then if they stop saving they only get 3 back,” Currys said.

In addition, Young Money Blog founder Iona Bain said that for the self-employed, auto-enrolment is a “non-starter”.

“As someone who is self-employed I think auto-enrolment for the self-employed is a complete non-starter and coming back to the issue of the employer contributions versus the employee contributions, if we have a system in which companies are putting more and more towards their employees’ contributions you are going to create this incredibly unfair two-tier system, where the self-employed are expected to put way more towards retirement, when they already have an incredibly difficult time just establishing themselves.”

On the subject of engagement, Royal London director of policy Steve Webb questioned whether we want a world where those in their twenties are thinking about their pension.

“The idea they should be checking the stock market, worrying about what’s happening each day to equities, they just shouldn’t. I don’t want a world where that’s what they spend their time thinking about.”

Bain added that Webb was referring to “over involvement” and there are “dangers” in trying to give too much information to savers. She said it is about “having the right information at the right time”.

Webb said that we need a system where people who don’t know what they’re doing, still get good outcomes.

He was backed up by Lewis, who said: “You shouldn’t have to worry, you should just know that what happens automatically, you will have a reasonable life when you stop working and if you want to do more you can do more.”

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