Rachel Reeves suspends pension review to avoid extra burden on UK business

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Chancellor Rachel Reeves has imposed a pension review after fears it could force employers to increase their contributions to workers’ pension pots by billions of pounds.

Reeves wants to avoid putting more pressure on business after he was angered by his Budget, which hit employers with a £25bn bill for increased national insurance contributions.

Pensions minister Emma Reynolds had promised to launch a review into the adequacy of retirement savings before the end of the year, but it has now been delayed indefinitely.

Under current registration rules, workers must pay at least 8 percent of qualifying earnings into occupational pensions each year, at least 3 percent of which must come from employer contributions.

Many experts believe that such fees could leave many people without enough money to retire.

Earlier this year the Phoenix Group, the UK’s biggest retirement savings business, estimated that raising the minimum subscription to 12 per cent would result in an extra £10bn in pension contributions. an annual pension, shared between employees and employers.

But the Department for Work and Pensions has told the Financial Times it will not start a second round of pension reviews this year, with people briefed on the matter saying Reeves has blocked the move.

“Rachel is very aware of the fact that business is facing increased tax and is committed to ensuring that new burdens are not placed on business,” said one person familiar with discussions between the Treasury and the DWP.

In the first part of the pension review, Reeves announced “megafunds” series projects of at least £25bn each across defined contribution and local government pension schemes, a move he hopes will free up £80bn for start-up investment and infrastructure.

Although government officials insist that the second phase has not been “delayed for a long time”, there is no new date as to when it will start. “It’s ‘TBC’,” said one officer.

A DWP spokesman said: “We’re committed to making sure tomorrow’s pensioners are supported, which is why the government has announced a crucial two-stage post-employment review. The government will provide more details about the second phase in due course.”

Sir Steve Webb, a former pensions minister and LCP adviser, said the delay was “too serious” as it could result in “wasted years”.

“The Budget was the death knell for the prospect of serious progress on pension equity,” Webb said.

When the government announced its pensions review in July, it said it would “consider further measures to improve pension outcomes and increase investment in the UK market, including a review of retirement adequacy”.

Pension experts worry that if the delay continues, it could damage the retirement prospects of millions of savers.

Research from the Center for Financial Studies this year found that 30 to 40 percent of people who save in defined contribution plans are about to have retirement incomes that fall below the minimum. retirement savings are set out by the trade association Pensions and Lifetime Savings Association.

“It makes us very concerned because in our view it’s a very important part of the overall assessment,” said Zoe Alexander, director of policy and advocacy at PLSA.

“We feel that there is no time to lose on this matter.”

PLSA has asked the government to gradually increase the minimum registration fee to 12 percent of a person’s salary.

Phoenix also said a 15-year delay in implementing the increase could mean the average 18-year-old would lose around £35,000 in retirement income.