Opperman: AE reforms are ‘doable’ by 2025

At a Work and Pensions Committee hearing on July 6, the pensions minister stated that the bill to implement reforms in this area is ready, but that the current economic situation poses challenges to its introduction.

Currently, auto-enrolment rules dictate that employers must enrol into a pension scheme any staff aged between 22 up to the state pension age, and earning more than £10,000 a year. There is also a £6,240 lower earnings limit, which is the threshold that allows employees to qualify for certain state benefits, including the basic state pension.

In its 2017 auto-enrolment review, the Department for Work and Pensions proposed auto-enrolling workers from the age of 18 and abolishing the low-earnings threshold, with these changes to be implemented by the mid-2020s.

Opperman said there was “no doubt” that the two changes would impact employers significantly during a time of rising living costs.

He added that it depends on the new chancellor, Nadhim Zahawi, and the Treasury team, which saw the economic secretary to the Treasury John Glen resigning on the morning of July 6.

If the current fiscal situation continues, Opperman said it will be hard to impose greater burdens on employers, but that if the inflationary cycle eases off — as he believes it will — then his “confident expectation” to get the reform implemented is still the mid-2020s.

“I can’t give a precise date […] but everything is conceivable and doable”, he said.

Pressured by Work and Pensions Committee chair Stephen Timms if implementation by April 2025 would be possible, Opperman responded that it “is conceivable and doable”.

“I remain of the view that we will do the legislation before the end of this parliament,” he added.

Several pensions specialists have called on the government to introduce the reforms mooted in the review, with the Association of British Insurers recently setting a roadmap to increase minimum auto-enrolment contributions to 12 per cent by 2031.