Trial to up self-employed pension engagement underway; AE reform timeline debate 'ongoing'

Pensions Minister, Guy Opperman, has confirmed that work is “in progress” to create better pension saving solutions for self-employed savers, although he was unable to provide a further update on the government timeline for automatic enrolment (AE) reforms.

Speaking in Westminster Hall, Opperman emphasised that whilst the self-employed are able to sign up to a private pension, it is “much more complicated because you don’t have any of the benefits of AE”.

"There is a way forward and we have a trial that we are working on at the present stage with HMRC to explore the opportunities presented through making tax digital," he added.

Opperman said that there was a "clear solution" through this work, confirming that trials are already underway with HMRC and the Money and Pensions Service on how to make the existing tax system digital.

"Almost certainly it would be a drop down box and automatic deduction in circumstances that allow you to do what you presently can do on your manual tax return, and make it much more easy to have a self-employed automatic enrolment. It is a work in progress" he explained.

In addition to this, Opperman said that he was "very strongly" looking at the ways in which the Australian system has enhanced self-employed pension saving, and was hoping to update parliament "in the very near future on that point".

However, Opperman was unable to provide an update on the government’s proposed timings for the 2017 AE reforms, despite facing growing industry pressure on this issue.

Opperman clarified that whilst “events have gotten in the way" of the planned phased introduction of the reforms, the government remains committed to implementing the reforms.

"The practical truth is that this is the unquestioned commitment of government that we will bring forward the 2017 review measures in respect of the lower earnings limits and the 22 to 18 threshold, without a shadow of a doubt," he said.

“The way in which we do that and the phasing of that is still a matter of ongoing debates within government. People above my paygrade have to make decisions on that, and it is obviously dependent on other pieces of legislation and other considerations."

Indeed, Opperman explained that any timetable would involve primary legislation to introduce the primary measures, with secondary legislation and a consultation to follow that, and further timings to follow thereafter.

However, Opperman hinted that the Queen's Speech in May could be one path to progress the reforms.

“Clearly it is not for me to decide what is in Her Majesty's Queen's speech, either this year or the next, but there are clearly a variety of ways that we can progress such legislation," he said.

Whilst a Private Member's Bill seeking to set out a roadmap for the reforms was introduced earlier this month, Opperman clarified that this could prove "complicated" for normal government business, particularly given that it has been introduced later in the current parliamentary session.

“But it is certainly my intention as a minister to bring forward the legislation, subject to all the usual provisos of being a minister in a larger collective.” he emphasised.

Opperman also highlighted the importance of cross-party support in progressing the bill, arguing that "clearly this is a piece of legislation that has the support of all political parties".

Looking further forward, Opperman confirmed that the government intends to look into the issue of minimum contribution levels after the 2017 recommendations have been implemented, in light of concerns that 8 per cent was "not enough".

He said: "Subject to the ability to take these things forward, the next goal after the 2017 review is clearly a discussion and debate about what above 8 per cent is enough."

LCP partner and former Pensions Minister, Steve Webb, however, described Opperman's update on AE as “hugely disappointing”, urging the government to take action sooner to help savers avoid a "miserable retirement".

Webb said: “It is a huge disappointment that more than four years after DWP published a widely accepted review of automatic enrolment we are still no nearer to seeing these modest changes implemented.

“The government needs to realise the urgency of this issue. A whole generation of people who missed out on DB pensions and are only building up modest DC pensions could be set for a miserable retirement unless the pace of change is increased. Good intentions are no longer enough, we need action”.

These concerns were echoed by Aegon head of pensions, Kate Smith, although she acknowledged that the cross-party support for the reforms was "an amazing achievement in itself".

“Unfortunately, we still don’t have a timetable for implementing the 2017 review of auto-enrolment, as conversations are still ongoing across government, but there’s a possibility that enabling legislation may be included in the Queen’s Speech in May," she said. "Until then we await with bated breath.”

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