Pensions Minister to consult on AE changes 'as soon as humanly possible'

Pensions Minister, Laura Trott, has reiterated her commitment to consulting on plans to extend auto-enrolment (AE), stating that she hopes to share a consultation “as soon as humanly possible” once the Private Member's Bill works its way through the House of Lords.

The bill, which has been scheduled for a second reading in the House of Lords on 14 July, seeks two extensions to AE, abolishing the lower earnings limit for contributions and reducing the age for being automatically enrolled to 18.

The impact of the AE changes was included in the government’s analysis of recent private pension measures on member outcomes, which revealed that the AE changes will have the “greatest impact on pot sizes”, with the combined measures forecast to increase total pension contributions by £2bn per year in 2022/23 terms, or by £45bn over 30 years.

At an industry event on the Mansion House reforms, Trott was asked whether she was able to provide any further updates on a potential consultation on the AE changes, with Pensions and Lifetime Savings Association (PLSA) chair, Emma Douglas, arguing that "the money being paid in is really important, as well as the returns you get on it".

Responding to this, Trott confirmed that she is still aiming to publish a consultation on the AE changes “as quickly as possible”, clarifying that she has no control over the pace at which the bill is currently progressing through parliament.

“I hope what I've shown in my time as Pensions Minister is that I will get these things done, because they will make a difference to the amount that people get in retirement and that's what everyone here is all about," she continued.

"So as soon as it passes through the House we will get a consultation up and running as quickly as we can.

"And it is really important to consult on how we implement these reforms, in terms of timing, whether we need to stagger them, actually what the age is, whether it's 18 or 16, so all of these things we need to look at in more detail.

"But we do need to get on with it, and I'm very aware of that."

Speaking to Pensions Age, Trott also clarified that despite the “ambitious” nature of the Mansion House reforms, many of the measures are expected to work well together to improve member outcomes.

She stated: “These are very ambitious changes, but I am ambitious for our pension system in this country. I've got some absolutely brilliant officials who have been working incredibly hard on this.

"What we saw today was consensus from the industry that these measures actually fit together very well and these are things that lots of people have been wanting to do for a long time, for example, super funds."

"It's important that we press forward," she continued, highlighting the inclusion of the pension reforms as a key item the Chancellor's Mansion House speech as evidence of the priority that the government places on this.

"It's very much a case of Department for Work and Pensions and HM Treasury working very, very closely together to make a real difference to future pensioners," she added.

Whilst some industry commentators have suggested that further changes to auto enrolment may be needed to support some of the Mansion House reforms, such as changes to AE investment caps given the push towards private equities, Trott confirmed that the immediate priority is the 2017 reforms.

“We’ve got to get those through," she continued, "there's a large degree of consensus with them and they are big reforms and they will make a big difference for people.

"I've got to get those done, and once I do, we can see what's next."

Trott had previously suggested that she was aiming to launch a consultation on plans to extend auto-enrolment (AE) in "autumn", subject to the Private Member’s Bill achieving Royal Assent.

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