The influential Society of Pension Professionals (SPP) has called on the government to shake up workplace pensions and is proposing a raft of new measures, including raising the auto-enrolment contribution minimum from its current level of 8% to 12%.
The SPP has tabled the recommendations in its response to the Work and Pensions Select Committee’s inquiry into pensions adequacy.
Among the key SPP key recommendations are:
- Gradually increasing auto-enrolment minimum contributions towards 12% of total earnings, with employers and employees sharing the responsibility equally at a minimum of 6% each
- Introduce a national accreditation scheme to "celebrate and reward employers" who contribute above statutory minimum levels
- Encourage sidecar savings and introduce an 'opt-down' facility, allowing people facing temporary financial pressures to temporarily reduce contributions rather than quit their pension scheme
- Make it easier to contribute directly to pensions for younger family members: The non-earner pension contribution limit (£2,880 net) has remained unchanged for over a quarter of a century, and many are unaware the option exists, the SPP says
- Introduce any contribution increases over a six-year period, allowing businesses and individuals to adjust.
The SPP says that together with other recommendations in its response, the proposals offer a "positive and practical framework" for the next phase of pension reform, building on the foundations of automatic enrolment while recognising the importance of affordability for both employers and employees.
Calum Cooper, President of the Society of Pension Professionals (SPP), said: “Automatic enrolment has been a tremendous success, and we now have an opportunity to build on those foundations. There is no single solution to improving pensions adequacy, but a combination of sensible, phased contribution increases, getting people saving earlier, encouraging employers to do more and providing greater flexibility for savers can make a real difference.
"Our recommendations are intended to support the Government’s work and contribute practical ideas to help create a pension system that works better for everyone – individuals, employers and future generations of pensioners.”
The SPP is the representative body for a range of providers of advice and services to pension schemes, trustees and employers. Members include actuaries, lawyers, professional trustees, DC consultants, investment managers, providers, administrators, covenant assessors, and other pension specialists. The SPP's 100 corporate members collectively employ more than 20,000 pension professionals
• The full SPP inquiry response is available here: https://the-spp.co.uk/document/spp-response-to-the-work-pensions-select-committee-inquiry-into-pensions-adequacy/