“DWP backs ‘landmark’ expansion of auto-enrolment”

Mar 20, 2023 | Pensions

An independent (financial adviser’s) view

There’s been a lot going on, and this little piece of legislation may well have crept below your radar. It means that every adult employee, whatever they earn, will now be auto-enrolled into a pension. It was previously only 22 year olds getting more than the ‘lower earnings limit’ of just under £6,400 a year. The idea is to ‘help lower earners, who have traditionally found it harder to save for retirement’. Here’s the scary thing however. If you run the numbers, someone saving 8% (the auto-enrol, workplace pension minimum) of their £20,000 salary for 50 years will have enough to give them a pension of around £8,000 a year after inflation. But very few are going to plough-on, saving at that rate for that long. And, if we haven’t sunk beneath the waves, we’re likely to have had at least 20 tinkering governments before then. So problem not yet solved, I’d say.

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a woman holding a jar with savings written on it
“Rachel Reeves may be forced to raise taxes”

“Rachel Reeves may be forced to raise taxes”

Why did she/they (in the old sense) think that tinkering around with IHT and CGT would be enough to sort out the NHS; and the potholes; and…and the list goes on. My guess is  that they asked the Treasury for a list of anything not involving income tax that they could get away with lightly, although they should already have learned from the winter fuel stuff that all publicity is not good publicity.