Recommendation 13

HM Government · verbatim extract Acknowledged

The government recognises the valuable role of carers, and that carers are disproportionately women. Our aim is to extend the pension saving of those who have historically under- saved for retirement, through implementation of the 2017 AE Review Measures. AE works through the employer-worker relationship and is based on a contract of employment. The system was not originally envisaged to provide credits for groups outside the labour market. The 2017 AE Review set out the government’s ambitions for the future of AE to enable more people to save more and to start saving earlier. These changes would help improve financial resilience for those who have historically been under-saving for retirement, such as young people, women and lower earners. The government remains committed to the implementation of these ambitions in the mid-2020s. We will continue to prompt people to engage with their pensions. The pensions industry, employers and the government all have a role to play in this. We look to promote opportunities for employers to do more within the existing AE framework. The 2017 10 Protecting pension savers—five years on from the pension freedomss Saving for later lifes overnment, Financial Conduct Authority and Money and Pensions Service esponses to the Committee’s Third eport of Session2022223 review looked carefully at excluded groups, including those providing informal care. At the time, the conclusion –following extensive input and consultation – was that there should be no change to the way that carers are currently treated through AE. However, where eligible carers are working, and meet the AE criteria, they will be automatically enrolled into a workplace pension. If they earn below the threshold, they can still ask to be enrolled into their employer’s workplace pension scheme and begin saving in their own right. The government has ensured that Carers in receipt of Carer’s Allowance (providing at least 35 hours of care per week) are automatically credited with a Class 1 National Insurance Credit which helps to protect their future entitlement to a State Pension. Additionally, individuals who provide care of between 20 and 35 hours per week can apply for Carer’s Credit which helps protect their future entitlement to State Pension. State Pension eligibility can be built through being credited with NI credits including for Child Benefit. HMRC have taken steps to encourage new parents to claim Child Benefit regardless of household income to help them build qualifying years of National Insurance for future State Pension entitlement. Earnings trigger Recommendation 14: Following publication of this (low earners) research, DWP should write to us setting out a timetable to review the level at which the earnings trigger is set and, if it is unable to do so, explain what action it intends to take to address the exclusion of low earners from auto-enrolment. There is a statutory requirement under section 14 of the Pensions Act 2008 for the Secretary of State to review the earnings trigger and the qualifying earnings band for AE in each tax year. This review is intended to set the trigger at a level that brings those individuals into pension saving for whom it pays to save, while recognising the importance of an individual’s own financial decisions. The Department will confirm and announce the earnings trigger and related AE thresholds for 2023/2024 in the normal way. An analytical work programme is addressing evidence gaps on choices around the trigger and the timing/phasing of changes to the LEL. This includes research underway to understand the views and attitudes of low earning employees toward AE, and quantitative analysis of the impacts of any changes across the income distribution. We also continue to monitor opt-out rates, particularly for low earners, given the increasing cost of living. Multiple jobs Recommendation 15: We also recommend that DWP and HM Treasury continue to explore ways to bring multiple jobholders within the scope or auto-enrolment, for example, by amending the PAYE coding notice system to add an instruction to auto- enrol.