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Sir Keir Starmer has been warned his new pensions bill will fail to tackle the crisis facing retirees, with the prime minister having ducked an increase in automatic enrolment.
In his first King’s Speech, the PM unveiled plans to support more than 15m people with private pensions and ensure they get better outcomes.
Sir Keir said the bill would boost the amount available for pension savers and help average earners save an additional £11,000 over the course of their career.
The pensions schemes bill included measures to prevent people losing track of pension pots, ensure workers are saving into pension schemes that deliver value for money and consolidate the defined benefit pensions market through so-called commercial superfunds.
The government estimates that the measures will lead to pension pots being around 9 per cent higher by the time a person retires, while allowing more productive investment of funds in British infrastructure and companies to boost growth.
Investment platform AJ Bell, said the bill will “put millions of people’s pension pots at the heart of the new government’s drive to boost investment in the UK and drive long-term economic growth”.
Public policy director Tom Selby said the government also appears “intent on pushing forward with greater consolidation of pension schemes”, in part to improve the value members receive.
But he said claims the measures in the bill will lead to bigger pensions upon retirement “need to be taken with a pinch of salt” due to risks in how funds are invested.
And he warned: “One key thing missing from this Bill is any mention of scaling up automatic enrolment.”
Mr Selby pointed to “wide agreement” in the sector that minimum contributions under auto-enrolment will need to rise, while a 2017 review recommended removing the lower earnings band and reducing the minimum qualifying age to 18 to help savers.
“The legislation for these changes is already in place – but the big question is when will it be put into practice?” he added.
Former pensions minister Sir Steve Webb meanwhile said the pension schemes bill represented “business as usual”. The former Lib Dem MP, now a partner at consultancy LPC, said millions with pension pots slightly over £1,000 will still struggle with savings “scattered across the pensions landscape”, adding that “further action may be needed”.
He added: “There appears to be nothing in the legislation that so far represents a distinctively ‘Labour party approach’ to pensions, and a Conservative minister could happily have brought forward this legislation. Perhaps inevitably, it will take time before we see how the new government’s agenda differs from that of its predecessor.
“But this does mean that any distinctive policies will have to await legislation later in this Parliament and may take time to have effect.”
Sir Steve has previously warned that “without urgent action we are likely to see more and more people facing an unenviable choice between an extended working life or a poor retirement”.
Rising living costs, particularly for food and energy bills, as well as shifting expectations about retirement lifestyles have driven a huge increase in retirement costs.
