Employees who have opted out of their workplace pension during the coronavirus crisis should be encouraged back into saving more quickly than usual, MPs have said.
The Work and Pensions committee urged the Pensions Regulator (TPR) to consider helping such workers re-enrol sooner than the current three-year timeframe under auto-enrolment rules.
The committee believes this is important as many savers may have left their auto-enrolment pension during the crisis as a result of suffering financial difficulties.
In its 111-page report, the committee heard evidence from David Fairs, executive director of regulatory policy, analysis and advice at TPR, that contributions paid during the pandemic could end up being particularly valuable for savers.
This is because contributions made when market values are low could see a greater increase in their value than usual if markets return to normal levels.
The report stated: “Employees cannot legally be encouraged by their employer to opt out of their pension contributions, but many people may opt out voluntarily if their incomes fall because of the pandemic.
“We recommend that the Pensions Regulator consider whether employees who do opt out during the pandemic should be helped to re-enrol earlier than would happen normally under auto-enrolment.”
Tom Selby, senior analyst at AJ Bell, agreed with the committee’s recommendation. He said: “The Covid-19 pandemic has placed huge strain on household incomes, and it is inevitable some people struggling to make ends meet will have felt it necessary to opt out of their workplace pension. It is crucial these people are nudged back into saving for retirement as soon as possible.