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Scanning the regulatory horizon: what’s next for workplace pensions?

Mat Zimmerman It’s been ‘all go’ for workplace pensions in recent years and while the foundations for better saving are now in place through automatic enrolment, there’s a lot more change on the agenda. Here are the key things employers may want to look out for.

Mat Zimmerman, Market Development Manager

Automatic enrolment

From 6 April, the first stage of ‘step-ups’ will be in place, and minimum contributions for automatic enrolment will be 5%. Following this, we’ve already got the second stage of step-ups (to 8%) planned in for the start of the 2018/19 tax year.

Even before these take place, the Department for Work and Pensions (DWP) has laid out its intention to extend coverage for AE. Key proposals announced in its December 2017 review include:

  • Lowering the age threshold from 22 to 18
  • Getting rid of the lower earnings trigger, where band earnings are used for contributions.

The latter point means employer contributions will be paid from the first pound earned - a really significant improvement for many workers’ retirement prospects, especially low earners, but extra cost for some employers to plan for.

We’re not expecting these changes to come into place until the early to mid-2020s though, so you’ll have plenty of chance to plan ahead.

Employment and Workers Right Bill

This follows the widely discussed Taylor Review, and will get its first debate in the House of Commons on 27 April. One thing we’ll be looking out for is more clarity over employment status – particularly where something looks and feels like employment, but may currently be treated as self-employment.

Changing this could see more workforces become eligible for the full range of worker’s rights – including being automatically enrolled into a workplace pension. It’s also likely that the bill will look to make it clearer to employees what their rights are – possibly through statements produced by employers in a standard format, which will help ensure people know what they’re entitled to.

Pension dashboard

The pension dashboard, which is intended to help people see all their pensions in one place, offers a great opportunity for people to better engage and get a greater sense of ownership over their retirement savings.

The Department for Work and Pensions is expected to present a feasibility study on the dashboard in March. Guy Opperman, the Minister for Pensions and Financial Inclusion has already stated there is “no doubt the dashboard will happen.” The study should give us more clarity on how the dashboard will work – including how data is fed in, as well as a likely timetable. It’s expected to be live in 2019.

Employers won’t be required to feed data into the dashboard (except possibly in cases where the employer is a trustee for a workplace pension scheme) but could help make it successful by raising awareness with their workforces. It may also see changes in savers’ behaviour – with more people wanting to consolidate their pension pots from previous employments. This could lead to questions about how to transfer into the current workplace pension.


For employer use only.
Information correct as at February 2018