For immediate release: Wednesday 27 July 2016
Commenting on The Pension Regulator’s fourth annual commentary and analysis published today, Morten Nilsson CEO of NOW: Pensions said: “TPR’s latest report is encouraging reading. Auto enrolment is working and, for the most part, employers are aware of their duties and appear to be taking action.
But, there will always be time lag in TPR’s data as employers have five months from their staging date to complete their declaration of compliance.
Smaller firms are likely to pose more of a challenge and already we’re seeing an increase in the number of firms coming to us late, or after their staging date has passed. In Q2, 40% completed their application either very close to their staging date or after their deadline had already passed – the highest percentage over the recorded quarters.
To safeguard the long term success of the policy, contribution levels need to be urgently addressed. The 2017 review of auto enrolment presents the perfect opportunity for the government to set a clear path for increasing minimum contributions, to make sure auto enrolled savers have decent sized pension pots when they retire.
As a first step, by removing ‘qualifying earnings’* from the auto enrolment calculation, the government could significantly improve outcomes for savers. There’s a widespread assumption that auto enrolment contributions are on every pound of earnings but in most cases this isn’t true.
Qualifying earnings is frequently overlooked but has a corrosive effect pension pots which has long term consequences for savers.”
For further information:
Tel: 0203 640 9075
* Qualifying earnings are the band of earnings on which auto enrolment minimum contributions are calculated and for the 2016 / 2017 tax year the band is between £5,824 and £43,000 a year. This means the first £5,824 of an employee’s earnings does not count for the purposes of auto enrolment and anything above £43,000 isn’t included either.
NOW: Pensions www.nowpensions.com @nowpensions
NOW: Pensions is an independent, multi-employer trust serving thousands of employers and hundreds of thousands of employees from a wide range of sectors.
A subsidiary of one of Europe’s largest pension funds, Danish pension scheme ATP, NOW: Pensions offers a simple and cost effective workplace pension solution direct to employers and via advisers and the payroll sector.
In April 2013, NOW: Pensions became the first master trust to attain the NAPF’s new PQM Ready Standard. The benchmark shows employers that NOW: Pensions is a well governed pension scheme with low charges and good member communications.
In January 2015, NOW: Pensions achieved independent assurance of scheme quality in accordance with the new master trust assurance framework (AAF02/07) introduced by The Pensions Regulator (TPR) in conjunction with the Institute of Chartered Accountants in England and Wales (ICAEW).
The NOW: Pension Trustee Directors, whose role is to safeguard the interests of members, comprises well-known industry figures with different areas of expertise:
- Jocelyn Blackwell, founding partner Dunnett Shaw
- Christopher Daykin, former Government Actuary
- John Monks, member of House of Lords and former General Secretary of ETUC and TUC
- Win Robbins, former Head of European Fixed Income at Barclays Global Investors
- Nigel Waterson, former Shadow Pensions Minister
Employee charges are just £1.50 per month administration charge (reduced administration charge of £0.30 – £1.00 to be applied during auto enrolment phasing for lower earners) plus a 0.3% annual product investment management charge, with no hidden charges.