- Long overdue childcare reform is welcomed to support working parents and boost UK economy
- Expansion of AE to bring millions more pension savers into UK economy and improve retirement outcomes, as highlighted in the Private Members Bill that was supported by the Department for Work and Pensions
Following today’s Spring Budget 2023 delivered by the Chancellor Jeremy Hunt, NOW: Pensions, workplace pension provider to more than two million members, responds to the Spring Statement and what this means for the pensions industry and consumers.
Expansion of Free Childcare:
Extending the availability of free childcare has been a long time coming. With some of the highest fees in Europe, many parents are left facing a lose-lose situation of working purely to cover childcare costs or taking an enforced career break themselves.
Greater access to free childcare for under twos will enable more people who want to return to work to escape this trap and not sell their future selves short. Beyond contributing valuable skills to the labour market, working parents can gain more financial independence and stand a better chance of building enough pension savings to enjoy a comfortable retirement.
Expansion of Auto Enrolment (AE):
NOW: Pensions supports the aims of the Pensions (Extension of Automatic Enrolment) (No. 2) Bill as introduced by Jonathan Gullis MP. NOW: Pensions had previously worked with Richard Holden MP when he first introduced the Bill in January 2022 and are therefore pleased this Bill has now received government backing.
- Reducing the age for being automatically enrolled to 18 years old.
This would bring an additional 500,000 savers into workplace saving, increasing pension contributions by £1bn annually
- Introducing pension contributions from the first pound of earning
This would increase pension wealth for some underpensioned groups by as much as 56%.
Net Pay anomaly – implementation in 2024
NOW: Pensions welcomes the legislation that will finally resolve the Net Pay anomaly and come into effect in 2024. This is a great step for low earners, who we believe should receive tax relief on their pension contributions, no matter what kind of pension they have. Around 1.2m low earners will receive an annual payment which helps to create a fairer UK pension system for everyone.
Patrick Luthi, CEO for NOW: Pensions said: “The introduction of auto enrolment has been one of the biggest policy successes over the past 10 years. Following this success, we believe now is the time for Government to begin implementing the outcomes of the Automatic Enrolment 2017 Review, including lowering the age threshold for auto-enrolment from 22 years to 18 and removing the lower limit of the qualifying earnings band. These actions would help to bring greater numbers under the scheme and tackle the over 8.6 million people in the UK that remain underpensioned. A timetable to deliver these reforms needs to be managed sensitively and timely given the ongoing cost-of-living challenges that millions face.”