Millions of people are not saving enough for the income they are likely to want in retirement. Life expectancy in the UK is increasing but people are saving less into pensions.
To help people save for their retirement the government wants workplace pensions to be affordable for employers and attractive to workers. We want to encourage people to increase the amount they are saving in pension schemes so that they get the retirement income they would like. Enrolling workers into improved workplace pension schemes automatically will help to do this.
The government has other pension reform policies including:
- introducing the proposed simple, single-tier (flat-rate) State Pension to help people understand what they need to save for their retirement
- reviewing the State Pension age to make sure the State Pension is affordable in the long term and fair between generations
To help people’s pension savings meet their retirement income expectations we are:
- making enrolment into workplace pensions automatic
- providing information about workplace pensions for individuals, employers and the pension industry
We published our ‘Reinvigorating workplace pensions’ strategy on 22 November 2012. It explains how we plan to:
- increase the amount people are saving in pensions and the amount they receive for their savings
- enable industry innovation and development of new products
- increase transparency and build trust, confidence and engagement in pension saving as the norm
- make sure the UK pension system is sustainable and stable
In the coalition agreement, we announced our intention to encourage companies to offer high-quality pensions to all workers and to work with business and the pension industry to support automatic enrolment.
We commissioned an independent review of how to make automatic enrolment work that was published in October 2010 – ‘Making automatic enrolment work – a review for the Department for Work and Pensions’.
The Pensions Act 2008 introduced measures aimed at encouraging greater private saving. It included the changes to workplace pensions that came into effect in 2012.
Examples of who will and won’t be enrolled into a workplace pension
We’ve published examples of who will and won’t be enrolled into a workplace pension starting from October 2012 (fictional studies).
Welfare reform communications toolkit
Our welfare reform communications toolkit helps explain how DWP is changing the welfare system. It covers:
- what we are changing
- why we are making the changes
- when we are making the changes
Who we’ve consulted
We’ve consulted employers, savers and the pension industry on the following subjects:
- Definition of money purchase benefits in occupational pension schemes – the draft Pensions Act 2011 (Transitional and Consequential Provisions) Regulations 2014
- Better workplace pensions: a consultation on charging (from 30 October 2013 to 28 November 2013) – a range of measures to tackle pension charges to protect employees in workplace defined contribution pension schemes
- Pensions and growth (from 25 January 2013 to 7 March 2013) – a new statutory objective for the Pensions Regulator and the way scheme funding valuations work
- Abolition of contracting out – consultation on a statutory override for Protected Persons Regulations (from 18 January 2013 to 14 March 2013) – whether employers should be permitted to change the pension scheme rules which apply to certain people (‘protected persons’)
- The Pension Protection Fund and Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2013 (from 19 December 2012 to 29 January 2013) – certain changes to the Pension Protection Fund
- Supporting automatic enrolment – call for evidence on NEST constraints (6 November 2012 to 28 January 2013) – the annual contribution limit and the transfer restrictions placed on the National Employment Savings Trust (NEST)
- National Employment Savings Trust (NEST): Proposals for amendments to the NEST Order (from 30 October 2012 to 26 November 2012) – changes to make sure that NEST operates efficiently and to take account of recent changes to automatic enrolment legislation
Bills and legislation
The Pensions Bill was introduced to the House of Commons on 9 May 2013. It includes a number of measures that affect workplace pensions. For example, it corrects an anomaly in Sections 3 and 5 of the Pensions Act 2008 which can produce a simultaneous duty to automatically enrol and re-enrol jobholders. The Bill deals mainly with proposals for a single-tier state pension.
The Pensions Act 2008 put into law changes to the private pension system set out in the White Paper, ‘Personal Accounts: a new way to save’, which was published in December 2006. It included the changes to workplace pensions that came into effect in 2012.
We published background information about the Pensions Act 2008.
Impact assessments for the provisions in the Pensions Bill affecting workplace pensions are available on the Pensions Bill page.