Auto-enrolment has been a success for larger employers, but the "real test" lies ahead as smaller employers begin to enrol their employees, a report by the Public Accounts Committee has concluded.
1.8 million smaller employers will soon begin the process, but the Committee notes that The Pensions Regulator does not yet have access to the real-time information needed to ensure a smooth roll-out.
The Committee expressed concerns about the administrative burden being placed on smaller companies with fewer resources. They recommend further simplifying the auto-enrolment process.
Long-Term Effect On Retirement Incomes
The report also notes that auto-enrolment is being implemented along with a number of other "wider reforms" that could effect the "long-term adequacy of retirement incomes." So far, the effect that the changes to the state pension age, the new state pension and pension flexibility will have on retirement incomes is unknown.
Morton Nilsson, CEO of NOW: Pensions, said:
"Auto-enrolment minimum contributions will not be enough for a comfortable retirement. In order for the success of auto-enrolment to last into the future, contributions to workplace pensions need to be increased."
The Department of Work and Pensions is conducting its own review of this issue, which should report in 12 months.
Contact us for help in preparing for auto-enrolment.