Select committee: Work and Pensions Committee
Recommendation 9
Third Report - Protecting pension savers – five years on from the pension freedoms: Saving for later life
Published 30 Sep 2022
Paragraph 74
Addressed to Department for Work and Pensions
Work and Pensions Committee Protecting pension savers – five years on from the pension freedoms: Saving for later life All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Recommendation (the committee's words)
The number of self-employed people saving in a pension has declined since the late1990s when it was around 48%, to around 16%. This is in stark contrast to the 88% of workers eligible for auto-enrolment participating in pension saving. Trials to encourage self-employed people into pension saving have not been effective. The former Minister for Pensions told us that the “lessons of automatic enrolment are that default is the only way to get big interventions” and that the aim was to trial this once Making Tax Digital was up and running. The employer contribution has also been key to the success of auto-enrolment for employees, providing an incentive to participate. We recommend that HM Treasury and DWP work together to: (a) set a date to trial ways to default self-employed people into pension saving and; (b) consult on the proposal to increase the main rate of National Insurance paid by the self-employed (Class 4) by 3%, with the option to have the increase paid into a pension if the self-employed person also contributes 5% (including tax relief). Alongside that, the Government should consider how to promote pension saving to self-employed people.
From: Work and Pensions Committee, Third Report - Protecting pension savers – five years on from the pension freedoms: Saving for later life (HC 126), paragraph 74, 30 September 2022
Government response
The government responded to the whole report on 23 January 2023 (deadline 30 November 2022).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government "notes" the Committee's report and responds to each recommendation in turn, committing to implement the 2017 Automatic Enrolment Review measures while declining several proposals.
- On the 2017 Review, it remains "committed to the implementation" of its ambitions "in the mid-2020s" and aims to bring forward legislation "at a suitable opportunity and when parliamentary time allows", with a consultation on implementation.
- It declines to consult on a plan for older savers without Defined Benefit pensions, saying "We do not believe now is the right time to consult", and does not support trialling automatic Pension Wise bookings.
- It states that "a new office is necessary" is not its view: the government "does not believe that a new office is necessary" to build the evidence base on retirement adequacy.
- On the gender pensions gap, it is developing a definition and says any target "could only be considered once a suitable definition has been agreed upon".