Ms Reeves said: “Despite a very challenging inheritance, this new Government is getting on with the job of delivering our mandate to get the economy growing so we can make every part of our country better off.
“The review we are announcing is the latest in a big bang of reforms to unlock growth, boost investment and deliver savings for pensioners. There is no time to waste. That is why I am determined to fix the foundations of our economy so we can rebuild Britain and improve people’s lives.”
Lifting contribution rates for auto-enrolment, which began in 2012 and guarantees employees a workplace pension, would see employers and savers paying in more to their savings unless they choose to opt out.
The contribution rate is currently 8 per cent and it has not been raised since 2019. Employers must pay at least 3 per cent and the employee pays the remaining 5 per cent. It is not known how much the contribution rate is likely to rise in future.
In the 10 years to 2022 more than 10 million people were enrolled into workplace pension schemes through auto-enrollment.
Fears workers not saving enough
City bosses welcomed the Chancellor’s announcement and said they hoped pension contribution rates would be increased as part of the review, amid fears many workers were not saving enough for retirement.
Andy Briggs, chief executive of Phoenix Group, a pensions and savings firm, said: “With only one in seven people in the UK saving enough for a decent standard of living in retirement, we are happy to see that this review will expand to look at pension adequacy.
He added: “This is vitally important for people across the UK and we hope this will include a commitment to increasing auto-enrolment contributions.”
Barry O’Dwyer, chief executive of mutual Royal London Group, said: “Pensions already play an important role in supporting UK economic growth, and the review announced by the Chancellor is a welcome opportunity to consider reforms that could strengthen this further.
“We are particularly pleased the review will focus on delivering better retirement outcomes for people, as this must always be the main priority of the pensions system.
“We are also encouraged that the next phase of the review will examine retirement adequacy, as creating a long-term plan for increasing contributions will have a major impact on improving retirement outcomes and helping to finance growth.”
The review’s first stage is said to focus on examining actions pension scheme bosses can take “to support greater productive investment”, such as consolidating the number of assets savings are invested in.
The Local Government Pension Scheme, which administers savings for public sector council workers, has been earmarked for significant reforms, including cutting the fees charged by administrators to manage its £360 billion portfolio.