Significant auto-enrolment changes will end consensus, TUC warns

Soon after becoming pensions minister, Webb ordered a review of the auto-enrolment legislation, due to be implemented in 2012. Business lobby groups have since proposed reducing the number of employees the legislation will affect and therefore reduce the financial burden on firms.

But speaking at an event at the Labour Party conference in Manchester, Nigel Stanley (pictured) director of campaigns and communications at the TUC, said: “I’m very worried by what the new government is doing, especially with some of the rumours going around about the outcome of the auto-enrolment review.

“If some of the options under discussion are taken up, the TUC will announce that the pensions consensus is dead.”

Stanley was referring to three proposals the review body is thought to be considering.

One suggested amendment to the auto-enrolment legislation was put forward by the Federation of Small Businesses and the British Chambers of Commerce. This was to allow companies with fewer than 10 employees to be exempt from the legislation.

Another amendment the review body is believed to be considering is increasing the earnings threshold from just over £5,000 to £10,000 or £15,000 before an employee is required to be auto-enrolled.

The review is also understood to be looking at making employees close to retirement exempt from the legislation.

Stanley said such changes would undermine the original intention of auto-enrolment, which was to encourage the lowest paid workers to save for retirement.

Former pensions minister Angela Eagle was also speaking at the event and said she shared Stanley’s concerns over what the auto-enrolment review may produce.

“Based on some of the rumours I have heard, I would be extremely worried if the new government restricted the availability of Nest [National Employment Savings Trust],” she said.

Joanne Segars, chief executive of the National Association of Pension Funds, added: “In our view, the 2012 reforms are the best way to get seven million non pension savers to become pension savers.

“By chipping away at that it seems to be taking away from what this was set up for in the first place.”