If you’re among the 6.1m people who’ve been automatically enrolled into a workplace pension, you probably think there’s nothing to worry about.
After all, for the most part employers are doing what they should be and the number of employees opting out of the scheme has been low.
So why worry?
Well, a group of MPs – the Work and Pensions Select Committee, to be exact – says gaps in pensions regulation have allowed potentially unstable master trusts onto the market, meaning employers could unwittingly be putting their employees’ savings at risk.
Master trusts are multi-employer pension schemes in which decisions on investment are taken by a single trustee board.
The Work and Pensions Committee is worried that if one of these funds collapses, there is a "very real opportunity" that workers would lose their retirement savings.
The committee also thinks there isn’t enough clarity on employers’ liability if a master trust was to collapse, or if any chosen pension fund fails, and is concerned the new Lifetime ISA could distract from automatic enrolment and convince workers to opt out of a workplace pension.
Chairman Frank Field MP said: “Auto enrolment has been a tremendous success that will ultimately see approximately 9m people newly saving, or saving more, in a pension.
“Crucially now we must do much more to ensure that people’s savings are put in the best possible place, and are secure.
“To this end, we greatly look forward to seeing a Pension Bill in the Queen’s Speech this week. This is what we and others have been calling for.”
Craig Mackinlay MP, a member of the committee, said the focus should now be on supporting 1.8m small and micro-businesses into automatic enrolment.
He said HMRC provides free ‘Basic PAYE Tools’ software to help smaller employers with up to nine staff to manage payroll calculations and reporting requirements.
“It is essential, in my view, that additional functionality be added to this application to enable smaller employers to manage their auto enrolment obligations without needing to outsource their payroll function or be forced to buy proprietary software.”
Gillian Guy, chief executive of Citizens Advice, said millions of people are still missing out on the financial security of a pension.
“People on low incomes who aren’t automatically enrolled into a pension scheme often don’t pay into a pension at all,” she said.
“The Work and Pensions Select Committee has heard our call to lower the threshold for automatic enrolment, so more people can save for their retirement.
“Self-employed people need the same support to save as employees. Our evidence shows that many self-employed workers don’t know how to pay into a pension, and being given the chance to opt in while reviewing their tax return is a good first step.”