He continued: “While many employers and individuals will be feeling difficult financial pressures, it is vital that the government is honest about how much people need to be saving into their pension over the entirety of their accumulation journey.
“If the government isn’t going to be increasing minimum contribution levels in the near-term, at the very least we need a change of rhetoric to demonstrate the importance and urgency of building up adequate pension savings.”
Prompts and nudges
Elsewhere in its response, the government also said that it would not support the trial of a system by which members are automatically booked an appointment with Pension Wise, the state’s pension guidance service.
According to the government, since the introduction of its ‘stronger nudge’ policy to encourage more people to use the service, appointments have increased 20 per cent year on year.
As a result of this, it said it will consider all options for “signposting and nudging” individuals to appropriate guidance rather than trialling automatic appointments.
Turning to the committee’s recommendations to better support self-employed individuals, the government said it has no plans to make automatic enrolment deductions for self-employed people through tax returns.
This was in response to the committee’s recommendation that it consult on a proposal to increase the main rate of national insurance paid by self-employed individuals by 3 per cent, with the option to have the increase paid into a pension if the self-employed person also contributes 5 per cent.
Instead, the government said it would again rely on “prompts and nudges” to help self employed people manage their money.
It said: “Accountancy software, payment platforms and bank accounts, could have an impact when aligned with the opportunities presented by Making Tax Digital, through working with software providers to explore potential solutions.”
It noted that the Department for Work and Pensions is currently working with BASDA, the UK trade body for business software developers to explore these opportunities.
New pension body ‘not necessary’
Responding to the committee’s recommendation that a new office be set up tasked with gathering and reporting on policy initiatives related to retirement adequacy and the gender pension gap, the government said this was not necessary.
It noted that the remit of this already falls within that of the DWP which already provides evidence and analysis in this area.
Furthermore it said it also works closely with regulators and other government bodies to inform its evidence base on pensions, such as the FCA, the Pensions Regulator and HM Revenue and Customs.
jane.matthews@ft.com
