Auto-enrolment rules need simplifying, MPs told

Business leaders have told the most recent Work and Pensions Select Committee meeting that auto-enrolment is going well, but it has been hindered by too much paperwork.

So far, almost 34,000 employers have managed to sign up more than 4.7m workers who didn’t previously have a workplace pension, into a retirement scheme through the initiative.

The committee were told by the Pensions Policy Institute that since the programme began in 2012 the take up had been good and that fewer people had decided to opt-out of the scheme than had previously been predicted.

However, witnesses giving evidence at the committee hearing said there was still some way to go to ensure all those eligible for the initiative were enrolled on time.

The main complaint about auto enrolment was that the process was too complicated and costly to administer, especially for small employers who potentially couldn’t afford to employ their own pension experts.

Another complaint was that some workers failed to understand the new pensions, partly because the rules aren’t written in plain English, and that this was one of the reasons for people opting out.

Dr Ros Altmann, an independent expert on finance and pensions, told the Committee that financial education needed to be given to workers in any auto-enrolment scheme to ensure they made the best decision.

The panel of expert witnesses also raised concerns about some payroll software providers, who had left business leaders surprised about their reaction speed to the new policy.

Judith Hogarth, interim head of employment and pensions at EEF, the manufacturers’ organisation, said that suppliers of payroll software were catching up with the new pension rules, but added that they still had more to do before they were properly up to date with the latest regulations.

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