Burghart 'sympathetic' to calls for AE reform

Parliamentary Under Secretary of State for the Department for Work and Pensions (DWP), Alex Burghart, has indicated that he is open to new ways to extend automatic enrolment (AE).

Speaking on a fringe panel session at the Conservative Party Conference, Burghart said he was “sympathetic” to recent calls for AE reform, particularly that the AE age threshold should be lowered, and that contributions should be based on the first pound earned.

Burghart also highlighted concerns around pension saving amongst the self-employed and gig-economy workers, noting that there is "a great many workers who are falling outside of the scope of AE, and it's a group that is likely to grow".

"We have to be able to give a similar nudge to those people, so they don't spend a large chunk of their careers outside the system altogether," he added.

Burghart also queried whether there could be room for future innovation, questioning whether there are way in which "you could encourage additional savings that might occasionally shift into the automatic enrolment pot”, although he clarified that there are no plans in place for this concept at the moment.

Elsewhere in the panel, The People’s Pension group director of policy and external affairs, Philip Brown, said that the pensions industry should come to a consensus on AE reform so that they can come up with a plan.

Brown stated that, whilst automatic enrolment has been a “phenomenal success”, it “might not have lived up to its full potential yet” and steps should be taken to achieve this.

This sentiment was echoed by Pensions and Lifetime Savings Association (PLSA) chair, Emma Douglas, who stated: “Now is the time to begin to form a new consensus to build upon the policy proposals that were there in the 2005 pension commission.”

There was agreement on the panel that now is not the time to ask savers to increase their pensions contributions given the cost-of-living crisis, however, with Brown stating: “No one is suggesting that we need to increase pension contributions today.”

Douglas also emphasised the need for automatic enrolment reform to take place over the long-term, stating that although reform is needed, it should be "over the next 10 to 15 years”.

Additionally, Gareth Davies MP spoke on the panel talking specifically on pension fund investing, applauding the “success story” of auto enrolment creating a 50 per cent increase of 20-29 years olds into pension saving.

However, Davies stated that there was a need to “democratize our capital markets” as only a small number of people knew what they should be doing with their savings.

Later in the session, Burghart also faced queries over the complexities of the pension tax regime, responding to a question concerning the lifetime allowance being “not fit for purpose”.

Burghart stated: “If we were to find tweaks in pension ceilings and in taxation levels could encourage more people to stay in work for longer and contribute to the economy and help it grow then that is something that should definitely be considered.”

"I know that over the next few weeks the Chancellor is building towards a major statement on his medium-term plan for growth on 23 November, and I’m sure he will be considering all these things at speed."

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