Lifting AE contributions must be a priority for a new government, Timms says

The next government must prioritise increasing minimum auto-enrolment contributions to 12 per cent during the next decade, former Financial Secretary and Chief Secretary to the Treasury, Stephen Timms, has said.

Speaking at the International Longevity Centre (ILC) Retirement Income Summit, Timms, who was first elected as a Labour MP in 1994 and is standing for election again in East Ham, London, said that a huge range of evidence under discussion at the conference about inadequate savings for retirement among different groups in society meant there was an urgent need to plan for increasing minimum contributions to 12 per cent during the next decade – and to explain to workers why this was necessary.

“If you’ve got a clear plan, which you stick to, and people can understand the need for doing it – employers as well as employees – then we would be in a good position for delivering the increases needed in a reasonable period,” he said.

Timms said he would also like to see clarification of the status of people working in the gig economy, so they can be brought into auto-enrolment and called on a new government to bring forward an Employment Bill in order to address under-saving among the self-employed.

In the longer term, he suggested, sector-wide collective defined contribution (CDC) pension schemes might also help more workers to benefit from auto-enrolment.

He noted that, in 2023, then-Pensions Minister, Laura Trott, assured parliament that the government was still seeking to extend auto-enrolment in line with proposals in its 2017 Review, although a consultation on the implementation of these reforms is still awaited.

As these are policies with broad cross-party support, Timms said: “I hope that will happen very soon after the election; and then those first steps will be taken.”

His call for a rise to 12 per cent minimum contributions was echoed by the Pensions and Lifetime Savings Association (PLSA) senior policy advisor Jordi Skilbeck, also speaking at the conference, who said that both employee and employer default contributions could be set at six per cent.

Skilbeck said the PLSA would also like to see additional help and support from government and the pensions industry for people who are likely to find it more difficult to save, including women and self-employed people.

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