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Unfinished Business

Building a fresh consensus on workplace pensions
Report type
Research and reports
Issue date
Key findings

The main findings are:

  • Automatic enrolment has brought members of many key groups into the workplace pensions system.
  • However, as it is currently constituted, many low-paid and part-time workers are missing out on workplace pensions. Women and those from certain ethnic minorities are most likely to fall into this category.
  • Contribution levels remain inadequate for a decent standard of living in retirement.

Our key policy recommendations are:

  • The 2017 review of automatic enrolment should be as wide-ranging as possible and used as the opportunity for the government to engage with trade unions and the government to develop a long-term plan for the development of auto-enrolment.
  • Abolish the earnings threshold for employer contributions.
  • Simplify radically the system of band earnings.
  • There should be a pathway to increase contribution rates with serious consideration given to an additional flat-rate contribution and auto-escalation.

Automatic enrolment has brought six million more people into the workplace pensions system.

However, its impact is threatened by a failure to build on the initial policy success and a focus by policymakers on new savings initiatives. Products such as the Help-to-Buy ISA and the forthcoming Lifetime ISA are disconnected from the world of work and priortise goals other than retirement saving.

Meanwhile, the so-called pensions freedom reforms that came into force in April 2015, have undermined the assumption that the purpose of a pension is to provide for an income in retirement by allowing savers greater scope to cash pensions in from age 55. This puts at risk employer support for retirement saving.

Automatic enrolment has also been destabilised by a change in the government’s approach to policy-making which, in recent years, has favoured bold and dramatic changes over slow, patient consensus building to underpin enduring reform.

If automatic enrolment is not to be condemned to a minor role in the UK savings landscape, we need greater urgency in developing plans to build a workplace pensions system that caters to as many workers as possible and allows them to build up sufficient savings for a decent standard of living in old age.

This report utilises original research by the TUC into the reach of automatic enrolment and modelling by the Pensions Policy Institute of potential policy remedies.

Download Unfinished Business Building a fresh consensus on workplace pensions (pdf)

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