Shaping the Future of Workplace Pensions: Exploring Flexibility in Automatic Enrolment

The Government is preparing to begin the second phase of its pensions review. While the first phase focused on how pension schemes invest members’ money, this next stage is expected to look at contribution levels from both employees and employers. At the heart of this phase is a key question: are current contributions high enough to support people in retirement?

The Chartered Institute of Payroll Professionals (CIPP) policy team has recently been in conversation with the Pensions and Lifetime Savings Association (PLSA) about the review. One of the ideas being explored is whether Automatic Enrolment could be made more flexible, especially for workers who may struggle to contribute under the current rules.

Right now, employees who can’t afford to contribute have only one option: they have to opt out entirely. This means they lose both their own contributions and the employer’s. Several organisations have suggested that the system should allow more flexibility to help people stay enrolled, even during periods of financial difficulty.

Ideas Being Considered
A few different options are being discussed, including:
• Allowing employees to reduce their contributions to a lower level while the employer continues contributing at the usual rate
• Letting employees pause their own contributions temporarily but still receive the employer’s contribution during that time
• Keeping the lower earnings limit in place for some workers but relaxing it for others, depending on their circumstances
The goal of these proposals is to keep employees engaged with pension saving, even if they need to adjust their contributions. This approach could help avoid the disruption that comes with opting out and re-enrolling later, while still supporting long-term saving.

The Employer Perspective
The PLSA wants to understand how employers would respond to these kinds of changes. Would they welcome the flexibility? How might employees react? And what practical challenges might employers face if contribution levels become more varied?
To explore these questions, the PLSA is planning two online workshops with CIPP members on 20 June. One will be for smaller employers, with up to 250 staff, and will take place at 10 am. The other will be for larger employers, with 251 employees or more, and is scheduled for 1.30 pm.
Each session will last an hour and will include time for discussion and feedback. Attendees will receive reading materials ahead of the session to help them prepare.

Why This Matters
These workshops are a chance to help shape the future of Automatic Enrolment. The feedback gathered will inform a report the PLSA is preparing for later this year. That report will be shared with the Government and could play a role in influencing pension policy going forward.
If you are involved in payroll, HR or pensions administration, your input could provide valuable insight. The process will be entirely confidential, and you will be helping to ensure that future reforms reflect the real-world experience of employers and payroll professionals.

Looking Ahead
Automatic Enrolment has brought millions of people into workplace pensions, but there is growing recognition that it may need to evolve. Introducing more flexibility could make it easier for employees to stay enrolled during difficult periods, while still protecting their long-term financial wellbeing.
With the Government preparing to review contribution levels and consider new policy options, now is the time for employers to have their say. Whether you run a small team or manage payroll for a large organisation, your perspective is important. These workshops are a chance to be part of a conversation that could shape pension policy for years to come.