Gregg McClymont: Pensions should be near the top of next PM's in tray.
With just days before we find out whether Conservative Party members prefer the campaign pledges of either Foreign Secretary Jeremy Hunt or his predecessor, Boris Johnson, there is scarcely any time for the two candidates to further outline their vision for the future. During their whistle stop tours of the land, much of the talk has, naturally, been about Brexit, our relationship with the United States and promises of tax cuts for individuals and businesses.
While these issues may capture the imagination of the 124,000 Tory party members, who are deciding who will be our next PM, there are plenty of other pressing matters that the next resident of No 10 Downing Street will need to keep in mind. Ensuring that everybody has access to a good workplace pension is one of them.
As it stands, there are more people saving in a pension than at any time in our history. This is down to the success of auto-enrolment pensions -- a policy that has welcomed some 10 million new pensions savers since 2012.
It has been a genuine success. So far. But there is more to do. Contributions from individual workers and their employers have gradually been rising from a low base, reaching eight per cent of salary in April of this year.
Monitoring how employees have responded to the April increase is crucial before any further tweaks are made to auto-enrolment policy.
Westminster itself recognises the need for improvement. The 2017 Auto Enrolment Review endorsed the case for making pensions contributions count from the first pound of salary, rather than anything after [pounds sterling]6,136. This would have a material effect on the prospects of lower and middle-income workers building up a decent sized pot for retirement. But no timetable has yet emerged for implementation.
Politics is in flux of course and commitments can fall by the wayside. But this delay is sensible.
Auto-enrolment has worked so far because it has been evidence-based. It would also be important to stage gradually the implementation of a "contributions from the first pound earned" policy because of its greater impact on lower earners.
More immediately, the government should consider measures to bring the benefits of auto-enrolment pension saving to more women.
Women make up only around a third of those auto-enrolled so far. Reducing the "enrolment trigger" from [pounds sterling]10,000 a year from one job to the primary National Insurance threshold level -- [pounds sterling]8,600 -- would bring the benefits of auto-enrolment to another half a million people, three-quarters of whom would be women.
This would help auto-enrolment play its full role in tackling the gender pensions gap. As things stand the average woman retires with a pension income [pounds sterling]7,000 less than her male counterpart. Women more often take a break from full-time work to raise a family, with a long-term knock on effect on their pension savings. More affordable and accessible childcare would help the four in 10 women who have said they would like to work more hours if childcare was more accessible.
One bright idea is to encourage childcare businesses to open in town centres -- a move which would help both Messrs Hunt and Johnson achieve their stated aim of "saving the High Street".
While I don't believe for one second that either candidate will spend the coming days discussing the vagaries of auto-enrolment pensions, they will do well to remember that people really do need a guiding hand when it comes to securing their future.
Gregg McClymont is head of policy at The People's Pension and former shadow pensions minister. He served as Labour MP for Cumbernauld, Kilsyth and Kirkintilloch East from 2010 to 2015
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|Publication:||The Scotsman Online|
|Date:||Jul 20, 2019|
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