The Investing and Saving Alliance (Tisa) has launched four proposals to ‘overhaul’ auto-enrolment (AE) as part of its Getting Retirement Right campaign, designed to ensure workers can better plan and enjoy their pensions.

The proposals were created in collaboration with major pension and investment firms, and include a “pioneering” recommendation to help prevent the least financially secure from increasing personal debt levels or foregoing household essentials in an effort to remain opted in to a workplace pension.

Under this proposal, those earning less than £17,500, and therefore meeting the Department for Work and Pensions' definition of 'low pay', would have the option to opt out of personal contributions, but with continuing employer payments.

The report follows Tisa's previous research paper, which recommended an "optimal" 12 per cent contribution level, identifying this as the appropriate level to ensure families are able to achieve a “moderate retirement”, when combined with full state pensions.

Considering this, the group has now recommended that this be split evenly between employees and employers, proposing that any increases be phased in over a period of 6 years, at a rate of 0.5 per cent per year, commencing in 2023.

The group has also supported the recommendations of the Net Pay Action Group, in calling for the anomaly to be corrected through an HMRC end of tax year reconciliation progress using RTI data, arguing that this would ensure a bonus, equal to any tax relief foregone, is automatically paid.

Commenting on the report, Tisa head of retirement, Renny Biggins, stated: “We are pleased to present phase two of the campaign which sets out our proposals to progress AE and ensure that everybody has the opportunity to save for their futures.

“AE has been a bigger success than anyone could have imagined but, nearly 10 years on from its inception, changes need to be made to ensure it continues to develop and serve hard working people in the UK.

“Research has shown that opt out levels have remained consistently low, lower than predicted, which is excellent news but may also have a detrimental impact on the lowest earners.

“This could result in levels of debt reaching unsustainable levels, yet it is also vital people are saving for their futures.

“We hope to continue working closely with the government to realise these proposals, most notably to protect the lowest earners and to ensure contributions reach the necessary 12 per cent of pensionable salary for the majority, which will allow people and households to retire on a moderate income as set by the PLSA Retirement Standards.”

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