Cameron: Hold government to auto-enrolment promises

Reflecting on the present state of retirement saving, the industry into which his “second-generation actuary” daughter has now followed him, Mr Cameron finds what feels like an unusual conclusion.

“Workplace pensions are in quite a decent position just now,” he says. “If I were in government, I would have more pressing concerns about things that need sorting out. The main one is social care funding.” 

This then creates a new kind of challenge for Mr Cameron and leaders of other industry groups – how to press for still-needed reforms when pensions are even further deprioritised by government?

Urgent reforms

On auto-enrolment, he hopes to see the government firm up its commitment to removing the earnings thresholds on contributions. This move has been promised in the mid-2020s, but with this coinciding with the likely timing of the next election, he urges policymakers to set themselves a more concrete timetable.

Mr Cameron is also keen “on allowing those who have multiple low-paid jobs to be auto-enrolled into something so they don’t lose out”, but says raising auto-enrolment contributions is not a priority.

“I am a little fearful of going too far, on a blanket basis up to 12 per cent from 8 per cent, because for low earners 12 per cent might be too much. It might encourage more people to opt out. We need ongoing initiatives to engage people voluntarily. It is not all about compulsion,” he says.

He worries over the plight of the self-employed: “They are an increasingly important part of the UK’s workforce. How can we do something so they are not left behind when it comes to pensions and are not second-class pension citizens of the future?”

Tasks for chancellor

With the new Conservative government likely to deliver a fresh Budget after postponing November’s  announcement, Mr Cameron says all eyes are on tax relief, hoping for a solution to the net pay issue hampering lower earners, and a comprehensive solution to the tapered annual allowance deterring higher-paid workers.

“I don’t think we should have a solution that works just for the NHS. We need to look more generally at a solution that works across the board,” he says

He likes the idea of flat rate relief but says the chancellor should not rush into this. “If we moved to a flat rate relief there would be much less justification for either a lifetime or annual allowance,” he says.

“When George Osborne looked into this a few years ago, there were a lot of complexities that needed to be thought through – for example, defined benefit pensions, salary sacrifice and working out how to avoid loopholes.” 

Closing the advice gap is another of Mr Cameron’s big concerns, particularly for DB transfers: “We can’t afford for this market to die. There needs to be a supply of advice or there are hundreds of thousands of people with DB pensions who might want to consider transferring. We need to make sure there is a route for them to do this.”

Looking ahead, he enthuses over the open finance potential of the pensions dashboard, but for now simply urges individual schemes and providers to do all they can “to make pensions for their members more acceptable, more interesting and less boring”.