Govt urged to expedite AE reforms amid labour shortages

The government should expedite auto-enrolment reforms to help address the ongoing national labour shortage, PensionBee has urged.

Research from the provider found that 63 per cent of workers were considering or were in the process of switching jobs, with job vacancies at a 20-year high, at 909,000 as of June to August 2021.

Despite this, the UK has been facing national labour shortages driven by Brexit and the pandemic, which has been compounded by workers rejecting certain sectors due to their reputations for low pay and poor conditions.

Considering this, PensionBee argued that vacancies could be made more attractive to lower-paid and young workers through auto-enrolment inclusion, estimating that this could also increase the annual pension savings of low-paid, part-time, and younger workers by up to £1bn.

However, the provider also noted that whilst there was speculation that the government will soon increase minimum wage for workers aged 23 and over, which may bring more part-time workers into the auto-enrolment system, younger workers would appear to be excluded.

PensionBee chief engagement officer, Clare Reilly, stated: “Sustained labour shortages can impact pension savers and retirees in a number of ways, including higher costs for consumers, which could stretch retiree incomes to cover essentials, like food, whilst leaving younger savers with less to put into their pensions.

“All workers are essential to a healthy and thriving economy, and it is not fair for some to be excluded from automatic enrolment in workplace pension schemes.

“The UK government is aware of this and has previously proposed to change the auto-enrolment policy to make it more inclusive. The current labour shortage provides an opportunity to act now and expedite this change to enable millions to start saving immediately, whilst making vacancies more attractive”.

The government has recently reiterated its commitment to introducing the AE reforms in the "mid-2020s", which is on track with previous timelines proposed by the government.

However, PensionBee is not alone in its call for quicker action, with the Pensions and Lifetime Savings Association (PLSA) recently outlining a number of AE reforms that it believes the government should consider in its upcoming Budget and Spending Review.

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