A bill which would extend auto-enrolment to those aged 18 and over has been delayed until after parliamentary recess in September.
The auto-enrolment bill passed its second reading in the House of Lords last week, but the committee stage has been pushed back to September, slowing the bill's progress.
In a debate in the House of Lords last week (July 14), Baroness Ros Altmann said the pensions (extension of automatic enrolment) (no. 2) bill could benefit 600,000 18 to 21-year-olds working in the private sector.
It would also see the lower earnings limit for contributions abolished.
Kate Smith, head of pensions at Aegon, said: “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 before parliamentary recess on July 20.
“However, the government has clearly run out of time, with the committee stage in the House of Lords pushed back to September 12, a week after parliament restarts.
“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.”
Smith said if the bill fails to get Royal Assent before the King’s Speech, which is due to take place sometime in the autumn, there’s a real risk that the process will have to start all over again, “or even worse, be kicked into the long grass”.
She added: “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 pound rather than applying a £6,240 salary offset."
Baroness Altmann, who sponsored the bill, also said in the debate last week that it will improve inclusivity and will give younger generations longer to benefit from the power of compounding long-term investment returns, giving them a chance to build bigger pension funds.
"It can also simplify the administration of workplace pension schemes, which will save money and reduce the risk of errors if a minimum age is no longer in place—although that will be determined in due course by regulations," she said.
In March, the bill passed its first and third reading in the House of Commons.
sonia.rach@ft.com
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