Getting small businesses and people earning low wages on board with automatic-enrolment (AE) will be the real test over the next couple of years, says the Public Accounts Committee (PAC).
In its latest report, the committee said smaller employers had fewer resources to administer AE and that simplifying the process would be critical for its success.
The PAC made a number of recommendations including the request that the Department for Work and Pensions (DWP) write to them within 12 months explaining the progress of the staging of small employers.
PAC chairwoman MP Meg Hillier said: "AE is entering a critical stage which will affect 1.8 million additional employers and their staff. It is vital people can understand, implement and have faith in the system.
"The DWP must watch and learn from the experience of small employers and ensure easy-to-use tools are in place to support them. At the same time, swift action is required to ensure The Pensions Regulator (TPR) can access accurate information."
TPR should develop a real time information (RTI) feed from HM Revenue and Customs by July 2016 at the latest to help identify employers with eligible employees for AE and ensure it stepped up compliance, the report added.
Hargreaves Lansdown head of corporate pension research Nathan Long said cutting back on services to control costs would not help create a "nation of informed savers" able to make confident decisions at retirement.
Britain could not afford to leave such people behind, Trades Union Congress (TUC) general secretary (pictured above) Frances O'Grady warned: "Many people in low-paid jobs don't benefit from auto-enrolment because they don't earn enough to qualify for a workplace pension. This means the majority of the UK's six million part-time workers are missing out.
"AE has been a giant step forward in many ways. But in order to build on its success ministers must ensure that people are not excluded from a decent retirement income."
- It should closely monitor the experience of small employers and consider ways to simplify online tools which allow the easy exporting of people’s own data.
- The department should set out a clear timetable to clarify how smaller pension pots held by the same person are to be treated and how it will affect the overall value of their retirement income.
- DWP should report to PAC in 12 months on the progress of its planned review of AE factoring in the wider reforms and potential effect on retirement incomes.
- The department should report to PAC within a year and update them on when the National Employment Savings Trust will repay its loan
- Scheme regulation, charge caps and disclosure requirements which cover all relevant costs to customers should be checked to ensure they remain low by international benchmark
Source: House of Commons
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