The Government is stalling on auto-enrolment dates, says Steve Bee. And it’s an atrocious piece of timing.
2012 is an important year for UK pensions. Indeed, it’s likely to be a year to be ranked right up there with 1911, 1925 and 1942 when the history of UK pensions is finally written in future times by an as-yet unborn genius and social commentator – whoever he or she may eventually turn out to be.
Even without the benefit of hindsight, though – and without having spent a lifetime in the scholarly pursuit of a deep understanding of pension policy – it’s easy enough for Joe and Josephine Average today to spot that the pension reforms coming in from this year on are a big-ticket affair. We are about to witness the most fundamental change to our pension system for a generation and certainly since most of the Baby-Boomers have been on the planet. Reforms that will sweep millions of Britons into accruing pension savings for the first time.
About time too, most would say, particularly given the news coming out of the Department of Work and Pensions that sent us off on our Christmas break with something other than wine to mull over.
What something, you ask? Well, the fact that only 38% of working-age people in our country are saving into a pension, for starters. Not only that, but that figure is the lowest level for the last ten years too. I mean, is that depressing or what?
Looking at the numbers in detail makes even worse reading, if you can imagine such a thing. What they show is that pension coverage is in a steady decline and has been for some time. And, worse still, that the decline is most marked in the under-40s. If that hasn’t got OMG written all over it I don’t know what has.
It’s not just me getting worried about this though. Oh no! Here’s what Steve Webb, the current grand fromage of UK pensions, had to say about it all in the aforementioned DWP press release:
“These are alarming figures, and they underscore exactly why our pension reforms will be so vital. With fewer people saving into a pension, lower annuity rates and an average of 23 years in retirement, many people could face a poorer future in their later lives.
“We simply must put a stop to this trend and get people saving. Automatic enrolment, beginning for the largest employers later this year, will get millions of people saving – many for the first time.”
Well, I agree with every word of that. But I am worried, if I’m being honest, that the central message that seems to be going out about pensions in the real world is that the Government has got its foot firmly on the brake of pension reform. Companies with fewer than 50 employees are being given an extra 12 months in which to auto-enrol their staff.
I really cannot see why such fundamental and important reforms have had to be delayed and over a million employers have had to be given the baffling message that their staging dates are to be delayed. In my view we should be bringing the dates forward, not putting them back.