Key “net pay” (or variations on the phrase) into the keyword search on this blog and you will find over 30 articles going back to early 2015.
It was Kate Upcraft who first put me on to the problem which emerged as the auto-enrolment entry band did not align with the entry level for income tax. She explained that not just the relatively few people auto-enrolled into net-pay occupational schemes then, but the huge number auto-enrolling since, could lose out on the Government promise of 4+3+1 contribution structure (with the 1 being a percentage of pensionable payroll, which earned a Government incentive. To put it bluntly, net pay schemes put 12.5% of your contributions at risk.
Of course the risk isn’t very real for the higher paid who are unlikely to get out of bed for less than £1000 pm; the risk falls on the lowest paid who often are the least advantaged in society.
I argue that those people who don’t get the ‘1’ are in contribution deficit and I’ve told the Pensions Regulator that if they are prepared to
block employers with DB plans from completing corporate transactions until DB deficits are plugged, they should do the same with DC. Whitbread’s sale of Costa to Coca-Cola is a case in point. We do not know how many Costa employers are missing part of their pension entitlement, but – knowing the nature of work at Costa, we can imagine it’s quite a few. I want an audit of DC contribution shortfalls to be carried out now and for the restitution of promised incentives to be completed before the deal is done.
This is why I am proud to be one of the signatories on the letter to the Chancellor, delivered by NOW Pensions.
Progress so far.
The Daily Mail’s This is Money has run its piece which is very comprehensive. You want a link? Here it is .
The Daily Express has also run a good piece. Here it is
And there are various articles in the trade and political press; here they are
Well done the few – what of the many?
It’s all very well for the pensions industry to squeal about rich people’s problems, (Annual Allowance, Lifetime Allowance, IHT thresholds), but it’s incumbent on all of us to come to the help of those who don’t have financial advisers and aren’t valuable to pension providers.
I’m really pleased to see those who put their signatures to the NOW letter. They deserve applause.
Caroline Abrahams, Charity Director, Age UK
Baroness Ros Altmann, Chair, pensionsync
Troy Clutterbuck, CEO, NOW: Pensions
David Dalton-Brown, Director General, Tax Incentivised Savings Association (TISA)
Anne Fairpo, Chair, Low Incomes Tax Reform Group of the Chartered Institute of Taxation
Helen Hargreaves, Associate Director of Policy, Chartered Institute of Payroll Professionals (CIPP)
Paul Nowak, Deputy General Secretary, Trades Union Congress (TUC)
Nigel Peaple, Director of Policy and Research, Pensions and Lifetime Savings Association (PLSA)
Henry Tapper, First Actuarial and Pension PlayPen
Steve Webb, Director of Policy, Royal London
But where is the ABI on this?
The ABI can generally sit smugly on the right side of the debate, because the GPPs which form the bulk of their corporate pension business operates on a relief at source basis. Though some insurers run master-trusts on a net-pay basis, the ABI declined to sign the letter as they could not mobilise their membership behind it.
What possible detriment could there be to the reputations of insurers , in calling for the low-paid to be given a break? I am saddened that the ABI are not signatories, I hope that they will put their weight behind the campaign within the next three weeks.
All eyes on the budget
In three weeks, Philip Hammond will deliver the 2018 Budget. He speaks for a Government run by Theresa May who pledged, on appointment to help those just getting by.
If Theresa May is reading the Express, the Mail and the many other publications I hope will follow, she may want to nudge her Chancellor a little further. For the untold number of us Brits who participate in auto-enrolment and don’t get the break they’ve been promised are precisely the people who struggle to “just get by”.
Esther McVey and Guy Opperman should be rattling the Treasury Gates. Opperman in particular- he asked to have the title of Minister of Pensions and Financial Inclusion. If you believe in financial inclusion and are happy to take the credit for auto-enrolment , why are you excluding the newly “included” from what you promised them?