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MPs call for auto-enrolment improvements 2 February 2016

MPs have expressed concern that The Pensions Regulator cannot yet access Real Time Information to aid the roll-out of auto-enrolment for small and micro employers and monitor compliance.

The House of Commons Public Accounts Committee (PAC), which oversees public spending, recently published the report from its inquiry into auto-enrolment (AE), and concluded that the “real test is still to come” for the project.

One of the findings of the report is that The Pensions Regulator (TPR) should ensure it has developed a fully functioning Real Time Information (RTI) feed from HMRC by July 2016 at the latest, and ensure it has stepped up active policing of compliance.

TPR currently uses HMRC PAYE information to plan implementation dates and monitor employer compliance.

With approximately 1.8 million small and micro employers required to fulfil workplace pensions duties over the next two years, the PAC report also states that simplifying the auto-enrolment process will be critical, as smaller employers have fewer resources to administer AE.

The PAC believes the Department for Work and Pensions (DWP) has still to resolve important questions affecting the value of workplace pensions and that “there is a risk people will be disappointed with their pension if they continue to pay minimum contribution rates”.

The committee is also concerned that the National Employment Savings Trust (NEST) does not know when it will repay the loan used for its establishment – standing at £387m at 31 March 2015 – or how much this will eventually cost the taxpayer.

Meg Hillier MP, chair of the PAC, said: “Auto-enrolment is entering a critical stage which will affect 1.8 million additional employers and their staff. It is vital people can understand, implement and have faith in the system.

“The DWP must watch and learn from the experience of small employers and ensure easy-to-use tools are in place to support them. At the same time, swift action is required to ensure The Pensions Regulator can access accurate information.

“There must be greater clarity on outcomes for employees – for example, those with multiple small pension pots – and also over the substantial loan, funded by the taxpayer, which was used to set up NEST.

“The DWP will in time conduct its own review of the programme and we would stress it is crucial this fully considers the impact of wider reforms that could affect people’s income in retirement.

“We will be following the DWP’s progress closely over the next 12 months and will expect it to respond effectively to the recommendations detailed in our report as the roll-out proceeds.”

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