The different way peoples' pension contributions are calculated risks cutting low earners out of auto-enrolment (AE) according to the pensions minister.
Speaking at today's annual Trades Union Congress (TUC) conference on pensions, Baroness Ros Altmann explained that employees on low incomes could lose as much as 20% to 25% in tax relief on their contributions.
This was if their contributions were calculated on net pay arrangements (NPA) where gross contributions are deducted from pre-tax pay, compared to relief at source (RAS) where net contributions are deducted from post-tax pay.
One advantage of RAS is that low earners, even if they do not pay tax, still make contributions net of basic rate tax and their contributions are still grossed up by providers.
She said: "We must help the smaller employers. The type of scheme your employer chooses for you can be crucial for the pensions of the low paid."
While millions of workers had been enrolled since 2012, Altmann was adamant there was still a long way to go over the next several years.
Altmann added: "We want people to have a good experience of saving into a pension. If they don't, will this policy succeed? I don't think it will. There is a huge opportunity and huge challenges for the pensions industry. AE at the minimum is really just a start."
Master trusts’ investment strategies have grown and become more sophisticated over the last three years, but “growing pains” are hindering progress, according to the Defined Contribution Investment Forum (DCIF).
The Pensions Regulator (TPR) has substantially increased the usage of its powers against trustees – posting a sharp rise in the use of formal information gathering powers and High Court production orders during the three months to the end of September....
More than half of BlackRock’s flagship UK defined contribution (DC) default fund’s assets will be invested in ESG strategies by June 2021.
The Pension Schemes Bill has completed its third reading, crossing its latest hurdle in the House of Commons.
An amendment to the Pensions Schemes Bill which would have seen people given a pre-booked Pension Wise appointment ahead of accessing their retirement savings has been defeated.