The Government has confirmed that it intends to move forward with major reforms to automatic enrolment pensions.
A consultation is expected to be published later this year.
The reforms are expected to include removing the lower earnings limit for minimum contributions. The limit is currently set at £6,420.
The removal of the limit would mean the first pound of earnings will qualify for matched employer contribution and tax relief.
The Government is also expected to lower the minimum age at which workers qualify for auto-enrolment from 22 to 18.
These measures combined would increase total pension contributions by around £2bn a year, or £45bn over 30 years, according to a Parliamentary impact assessment.
However, there is scepticism among the pensions community as to whether the reforms will come into force any time soon.
Tom Selby, head of retirement policy at AJ Bell, said: “Both of these reforms should be good news for savers but also come with significant risks. Most obviously, ratcheting up contributions during a cost-of-living crisis could be the straw that breaks the camel’s back for some savers, who might decide they simply cannot afford to put money to one side for retirement.
“Businesses could also push back against the idea of committing more cash to their employees’ pensions given the pressures they are facing at the moment. It is therefore unlikely we will get any change to auto-enrolment until the current inflation crisis has abated.”
He added: “While auto-enrolment has been successful in dramatically increasing the number of people saving something for retirement, it is still only a job half done. Whether the reforms are ultimately viewed as a success will depend largely on what happens next.”
