New legislation to extend the scope of AE has been delayed, and will not now become law until the Autumn.
The Pensions (Extension of Automatic Enrolment) (no. 2) bill went through the House of Lords last week with cross-party support, with many supporters hoping it to make it onto the statute books within a matter of weeks.
This bill brings all workers from the age of 18 into the AE regime, and will remove the lower earnings limit, ensuring contributions are made from total earnings, not just those over £6,240.
Despite passing through Parliament in a matter of months, it appears the government has ran out of Parliamentary time ahead of the summer recess. The Committee stage in the House of Lords has now been pushed back to September 12, a week after parliament restarts.
Pension experts have warned if these final few stages are now completed before the King’s Speech, due to take place at some point in the Autumn, there is a risk the process will need to start again.
Aegon head of pensions Kate Smith described the delay as “bitterly disappointing.” She says: “This legislation will not only bring younger people into the scope of auto-enrolment, allowing them to start saving in a workplace pension from age 18 instead of 22, but could be particularly helpful for low to mid-earners, enabling them to build up a larger pension pot under further changes that will see employer and employee contributions based on earnings from the first £ rather than applying a £6,240 salary offset.”
She adds: “Having rapidly passed through parliament in a matter of months, with cross-party consensus intact, we had high hopes that the Pensions (Extension of Automatic Enrolment) (no. 2) Bill would receive Royal Assent this month.”
“It’s bitterly disappointing that this really important piece of legislation will now be delayed until September, which could push this back considerably, as there’s still a few stages to get through. If the Bill fails to get Royal Assent before the King’s Speech, there’s a real risk that the process will have to start all over again, or even worse, be kicked into the long grass.”
Former pension minister and campaigner Ros Altmann, and a member of the House of Lords, has supported the bill, which which was a Private Member’s Bill introduced by Jonathan Gullis MP in the Commons.
After being approved in the Lords she said the government would have to consult on the rules and lay regulations to decide the details of the next stage of auto-enrolment as it moves the policy to the next stage.
She said that removing the legal minimum age requirement from auto-enrolment to include under 22s will help more than 600,000 young people start saving sooner and lead to them having larger pensions. She also added that removing the lower earnings limit will significantly improve lower earners’ pensions and so help narrow the gender gap, while also improving the position of other under-pensioned groups.
The post Parliamentary bill to extend AE delayed appeared first on Corporate Adviser.
