Pension auto-enrolment independent review in 2012 welcomed by employer groups

An independent review into how the new auto-enrolment pensions system will work has been launched by the government and welcomed by business groups.

Iain Duncan Smith, secretary of state for work and pensions, has today announced a team of three independent experts will spend three months looking at how to make automatic enrolment work before reporting back to the government in the autumn.

The review forms part of a programme of reform aimed at “repairing Britain’s outdated and inadequate pensions system”.

Other measures include consulting on how to remove the default retirement age of 65 from April 2011, linking pensions to earnings again from 2011, and consulting on raising the state pension age to 66 more quickly.

Duncan Smith said: “Britain used to have a pensions system to be proud of, but due to years of neglect and inaction we are left with fewer people saving into a pension every year and the value of the state pension has been eroded, leaving millions in poverty. We must live up to our responsibility to reinvigorate the pension landscape.”

Pensions minister Steve Webb added: “Our plans to reinvigorate pension saving will be underpinned by automatic enrolment into workplace pensions from 2012. But we need to make sure we get the details right, which is why we’re announcing a thorough and speedy review, to make sure that it pays to save.”

John Cridland, deputy director-general of the CBI, welcomed the new review and said: “We welcome the new focus the government has brought to reforming the UK’s pensions system. With people living longer than ever, we all need to save more for old age and find ways for people to extend their working lives.”

Cridland added the bureaucracy surrounding the auto-enrolment system had become complex and costly.

“We hope the review will address this, removing red tape for firms which already offer good pensions and revising the charging structure which could currently put off savers.”

David Yeandle, head of employment policy at manufacturing group the EEF, will be one of the three experts conducting the review.

He said: “The debate on pensions reform is now more important than ever, and making auto-enrolment work successfully for both employers and employees is vitally important if we are to reinvigorate workplace pensions saving.”

But Ferdinand Lovett, a solicitor at the pensions specialist law firm Sackers & Partners, said: “It is disappointing that such an important development in workplace pension reform is to be reviewed at this late stage, when we had thought there was a cross-party consensus as to the reforms.

“The announcement further reinforces the point that it is still very much a case of ‘watch this space’ with the 2012 reforms.”

Brendan Barber, general secretary of the TUC, added: “It is disappointing that the review team includes no union or other consumer voice, and while distinguished, appears to have little experience of pensions issues for women and lower-paid workers.

“Moving away from the comprehensive approach taken by the recommendations of the well-respected independent review headed by Lord Turner would be disastrous for the chances of establishing a new pensions system.”

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