Editor’s notes: The auto-enrolment open goal

Sir Keir Starmer’s administration has picked up where the previous government left off, pushing schemes of all kinds to invest more in “productive assets”. For the Local Government Pension Scheme (LGPS), chancellor Rachel Reeves has demanded more efficiency and less fragmentation. (Many argue that pooling is addressing these issues already.)

We have been repeatedly assured that improving member outcomes remains the ultimate goal and will feature heavily in the Pensions Review’s second phase. But I would argue that we have the scope to do this already.

Last week, Mercer painted a bleak picture of the future for the UK’s pension system due to the combination of an ageing population, a fragmented system and poor productivity. However, it also highlighted a “golden opportunity” to address these issues.

It was no surprise to see Mercer backing consolidation and investment in productive assets, two core pillars of the government’s Pensions Review.

But there is evidence that auto-enrolment could be as big an aid to these aims as any regulatory changes, while also boosting adequacy and financial inclusion – and the legislation is already in place to do so.

Dropping the earnings and age-related limits will bring millions more people into scope, aiding lower paid workers and those new to the workplace. More contributions means more money coming in, boosting scale.

Greater scale – supported by expertise and access to appropriate opportunities – will improve the ability of schemes to invest in private markets and other long-term assets in line with government goals.

All this is either happening or can be set in motion almost immediately. It’s as close to an open goal as the government is likely to get. And as the saying goes, you miss 100% of the shots you don’t take.

Nick Reeve is editor of Pensions Expert.

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