Shadow Secretary of State for Work and Pensions, Helen Whately, has questioned where the money would come from to increase minimum auto-enrolment (AE) contributions, stating that it currently feels “incredibly tight” to make changes.

Speaking at the Pensions UK Annual Conference, Whately was asked whether she believed minimum AE contributions should be raised.

She acknowledged there was a consensus around the concern that the amount people are saving for retirement was not going to be adequate for many.

However, Whately argued there was a “huge problem” with the proposal to increase the default minimum AE contribution due to the cost-of-living crisis.

“I do think there’s a huge problem with proposals to increase the default contribution there because of the situation of cost of living at the moment, with the level of bills on the one hand and employers really struggling with costs on the other,” she stated.

“Where would the money come from to do that? I tend to pull back from all of these things and say we’ve got to get the economy going.”

Whately argued that the best way to be able to afford better pension provision was to have an economy that is “firing on all cylinders”, with people being paid better and employers having more margin to address the issues.

“Right now, everything feels incredibly tight to make changes,” she added.

Pensions UK chief policy officer, Zoe Alexander, who chaired the session, highlighted that the association’s members would say that if contributions were not increased, it would be really difficult to see how retirement adequacy would improve over time.

“So many people, particularly people working for small to medium employers, are stuck at that 8 per cent,” she added.

---