David Prosser: This is no time to lose our nerve in the battle to solve the pensions crisis

 

Outlook: Having told us all to pay off our credit cards, but only once we've spent a bit more to get the economy back on track, is the Prime Minister about to make a similar pronouncement about saving for the future?

The introduction of auto-enrolment, the system by which all employees will automatically be joined up to an occupational pension scheme unless they specifically opt out, is finally due to go live next year, seven years after they were first proposed. As my colleague Simon Read reports on page 52, it is a response to the fact so few Britons are making any provision for their retirement and has been welcomed by every pension expert you care to ask.

There is, however, a growing fear that the Government is about to announce a postponement of auto-enrolment, on the grounds that it is not appropriate for the current economic environment.

Advocates of a delay include Adrian Beecroft, the venture capitalist charged by the Government with reporting on how regulation and red tape might be eased in order to help business. Theargument is that it is the wrong time to be asking employers, particularly small and medium enterprises, to take on the costs of auto-enrolment – both ofadministering the scheme and of contributing on behalf of staff. There is a second reason to consider delaying, one that has parallels with the way David Cameron was forced to backtrack on his credit card advice at the Conservative Party Conference. It is that if 7 million people are suddenly enrolled in a pension scheme at work, there will be a substantial hit to the economy as their contributions eat into their take-home pay. Some estimates say the hit could amount to a £10bn fall in annual consumer spending.

There is going to be a row in Westminster over this. Delaying auto-enrolment suits the Treasury, charged with delivering economic growth, and the Department for Business, worried about easing the burden on employers, but the Department for Work and Pensions is wedded to the scheme because its focus is on the shortfall in most people's planning for old age.

On the basis of political power, one would bet on a coalition of GeorgeOsborne and Vince Cable, in charge of the first two ministries, winning the day over Iain Duncan-Smith, the Secretary of State at the DWP.

That would be unfortunate, for the reality is that every delay in pensionreform will mean a more miserable old age for millions. And there will always be reasons to consider putting off today what is more easily left for tomorrow.

Remember too that auto-enrolment is being phased in over a four-year period, which means the hit to consumer spending will not be fully felt until 2016. That's when the smallest employers – those likely to find the reform hardest – must join up.

It would be fascinating to know what Lord Turner thinks about the debate. Now best known as the chairman of theFinancial Services Authority and tipped as a replacement for Sir Mervyn King at the Bank of England in 2013, his preoccupations these days are economic. But it was his Pensions Commission that proposed auto-enrolment in 2005.

PROMOTED VIDEO
Extras
indybest
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
art
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
News
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
i100
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Soft Developer (4.0, C#, Windows Services, Sockets, LINQ, WCF)

£65000 - £75000 per annum: Harrington Starr: .NET Developer (4.0, C#, Windows ...

C# Developer -Winforms, VB6 - Trading Systems - Woking

£1 per annum: Harrington Starr: A leading financial software house with its He...

C #Programmer (.Net 4.0/4.5/ C#) -Hertfordshire-Finance

£45000 - £50000 per annum: Harrington Starr: C #Developer (.Net 4.0/4.5/ C#, A...

JQuery Developer JQuery, UI, Tomcat, Java - Woking

£1 per annum: Harrington Starr: JQuery Developer JQuery, UI, Tomcat, Java - Tr...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home