Auto-enrolment will damage businesses and fail to help low earners

The IEA comment on the proposal to lower the earnings threshold for automatic enrolment in a workplace pension

Commenting on the proposal to lower the earnings threshold for automatic enrolment in a workplace pension, expected to be announced in a speech tomorrow by Rachel Reeves MP, Prof Philip Booth, Editorial and Programme Director at the Institute of Economic Affairs, said:

“Extending auto-enrolment down the earnings scale will nudge people into joining pension arrangements who can ill afford to do so. Many such people will move to full-time employment later in life and, at that stage, it will become appropriate for them to start to save for their retirement.

“The proposals will also load yet more costs onto employer – both administrative costs and costs of the employer matching contribution. Politicians should be making it easier – not more difficult – for employers to take on more staff.

“The effect of these proposals will be to exacerbate cost of living pressures by putting downward pressure on take-home pay.”

Notes to Editors:

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