There has been no evidence to suggest that a “significant number” of people have opted out of their pension scheme after the final contribution rate hike, The Pensions Regulator (TPR) has said.
Contribution rates jumped for a second time in April to a total minimum of 8%, from 5% the previous year. Up until April 2018, contribution rates were at a total minimum of 2% from when the auto-enrolment (AE) regime began in 2012.
Speaking at the Society of Pension Professionals conference today (23 September), TPR non-executive chairman Mark Boyle said: “AE has continued on its successful path, as we passed the 10 million savers mark earlier in the year.”
He also noted that the regulator has “managed to maintain an impressive AE compliance rate of 94%”, and “prosecuting with much more vigour, but does not want to be an enforcement-led regulator”.
“We’d much rather organisations work within the law, within the guidelines and with us. But we believe we are travelling in the right direction,” he continued.
Prosecutions brought by the regulator have led to a number of fines this year with regards to AE noncompliance. However, most significantly in March, an accountant was jailed for more than three years after he fraudulently took £290,000 from a pension scheme – the first time a prosecution by TPR has led to an immediate custodial sentence.
Boyle continued: “We recognise the need for all of us to lift our heads beyond the current uncertainties and look forward.
“What’s the future going to look like for a 22-year-old starting their life and being automatically enrolled into a pension today? What will the challenges be in 10 and 15 years’ time? Are we as an organisation, and industry ready for them?”
Boyle also noted that the regulator has had direct contact with more schemes than ever before.
He said: “This year, we are anticipating engagement with 1,400 schemes in total, which is four or five times more than we have done historically. We’re also becoming much clearer in setting our expectations.”
He noted the potential complete revision of its codes of practice – which will be condensed from 15 codes to one, web-based code – was an example of this.
Boyle added: “This is a very large piece of work for us. But again we want your input so we can make it as user friendly as possible. Watch out for the consultation, which is likely to be launched towards the end of the year.”
TPR announced it is considering plans to combine its codes of practice in July, as part of its ‘clearer, quicker and tougher’ initiative.