Following the findings published by the Workplace Retirement Income Commission, chaired by Lord McFall, Steve Herbert, head of benefits strategy for Jelf Employee Benefits would like to challenge one key point of the report.
He says: ‘I take issue with the main headline that 9 million employees will “fall through the cracks” by not being auto-enrolled into a pension scheme.
‘The justification for this figure can be found in the report as follows: “..it is predicted that at any one time 6-9 million will either not be eligible, primarily on age grounds (4-5 million) or will opt out (2-4 million).”
‘There is a strong counter-argument to this point: to paraphrase Steve Webb MP, The Minister for Pensions in the Committee debates: “21-year-olds have a habit of becoming 22-year-olds”.
So whilst 4-5 million may be excluded on age grounds at any one time, many will be included in the not-too-distant future as they pass the 22 barrier. It should also be remembered that many of those “excluded” will still be able to “opt-in” to a pension, and benefit from a company contribution, so they are not necessarily excluded at all.
‘Auto-enrolment is a huge step in the right direction, and I believe it’s too early to start looking at potential negatives, particularly when many of those employees “flagged” as being excluded may only be waiting to satisfy an entry criteria.
‘Time would be better spent looking to make auto-enrolment a success, not pick holes in it. The key to minimising opt-outs and non-joiners will remain in the field of education and communication. The pensions industry’s experience in this field will be vital to this task.’