DWP minister Sir Stephen Timms has urged the development of a roadmap towards an increase in the current 8% minimum contribution to auto-enrolment pensions.
Sir Stephen, a DWP minister but not the Pensions Minister, said this week at the Labour conference that the current minimum contributions were not enough for a comfortable retirement.
Sir Stephen made his comments at an Institute for Public Policy Research and Centre for Social Justice (CSJ) event on tackling poverty at the conference.
He said he wants to see a ‘roadmap’ to pension contribution increases.
Currently an estimated 11m people pay into an auto-enrolment, work-based pension scheme. The minimum contribution to an employee's pension savings is 8% of qualifying earnings. Employers must pay at least 3% and the employee 5% to provide the total 8% contribution. Employees and employers can pay more if they wish.
However many experts have said the minimum AE contributions are too low for a decent retirement and have also pointed out that many groups, such as the self-employed, are not covered by auto-enrolment.
The Department for Work & Pensions has estimated that 38% of working age people (about 12.5m) are not saving enough for retirement and increasing the minimum pensions contributions for AE is widely seen as a key means of solving this problem, according to the Society of Pension Professionals.
The society said the Labour party supported the idea of an increase in opposition but appears to have “cooled on the idea” now in government.
In a question from the society at the conference about plans to increase AE contributions, Sir Stephen said: “I am not the Pensions Minister and I realise we are living through a cost of living crisis but as I said when I chaired the Work and Pensions Select Committee, I think we have got to have a road map so people can see we are committed to doing this and when."
Sophia Worringer, deputy policy director at the Centre for Social Justice, said: “This is a huge problem that we can’t just keep kicking down the road.”
The Society of Pension Professionals has 85 corporate members who collectively employ over 15,000 pension professionals.