Delay/Don’t delay – an auto-enrolment divergence of views by John Lappin

Delay/Don’t delay – an auto-enrolment divergence of views

Today the Money Debate brings you two sides of a debate.

Here is Jelf’s head of benefits strategy Steve Herbert. We’ll do the full quote - “It has become evident in recent months that the economic environment is exceptionally bad, and possibly the worst scenario for more than a century. Auto-enrolment will add extra costs and duties to already hard-pressed employers, at a time when they can least withstand such extra burdens.

“But the issue goes further than that. Employees are facing stagnating pay-packets and increasing living costs, potentially for the next 5 to 10 years. Given this, few are likely to be able to find extra money towards a retirement fund.”

“Launching auto-enrolment against this backdrop increases the risk of a failure of this vital legislation, and given the fragile state of UK pension provision we would urge the government to listen to employers.”

However we have a contrasting view from an admittedly former Work and Pensions Secretary (oh and former Chancellor) Alistair Darling quoted in IFA online from the NAPF conference.

“If you delay these [reforms] for more than a year that is effectively saying it is not going to happen.”

In the Money Debate’s view, they could both be correct. Even if Darling was a better Chancellor than Pensions Secretary, his assessment of the political and lobbying risk to the reform may be spot on.

But Herbert, who of course sees employers every week, views the risk as being about the pound in people’s pockets or rather the lack of them. That seems perfectly valid to me and a strong argument, because auto-enrolment is as much about confidence as anything else.

It would be interesting to find out whether a majority of advisers on the corporate side of the market share his view.