Rachel Reeves puts pension review on hold to avoid further burden on UK businesses.

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Chancellor Rachel Reeves has put the pensions review on hold amid concerns it could increase employers' contributions to employee superannuation plans by billions of pounds.

Reeves wants to avoid putting further pressure on businesses due to the angry backlash to his budget, which left employers with a $25 billion bill for additional national insurance contributions.

Pensions Secretary Emma Reynolds had promised to launch a review into the adequacy of retirement savings before the end of the year, but this has now been delayed indefinitely.

Current auto-enrolment rules require employees to pay at least 8% of their eligible earnings into their workplace pension each year, with at least 3% of that coming from employer contributions.

Many experts believe that such rates will leave many people without adequate retirement income.

Earlier this year, Phoenix Group, the UK's largest retirement savings company, estimated that raising the minimum automatic enrolment level to 12% would lead to an additional $10 billion in annual pension contributions shared between employees and employers.

But the Department for Work and Pensions has told the Financial Times it will not begin phase two of its pension review this year, with people briefed on the matter saying Reeves had blocked the move.

Rachel is well aware that businesses are facing higher taxes and is serious about ensuring new burdens are not placed on them, a person familiar with the discussions between the Treasury and DWP said.

In the first phase of the pension review, Reeves announced plans for large funds of at least $25 billion each across defined contribution and local government pension schemes. With this, she hopes to free up $80 billion for investment in startups and infrastructure.

There is no new date for when Phase 2 will begin, although government officials insist it has been a long time coming. One official said TBC.

A DWP spokesperson said: “We are determined to ensure we support the pensioners of tomorrow, which is why the Government has announced a landmark second phase pension review since taking office.” The Government will announce further details about Phase 2 in due course.

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Sir Steve Webb, former pensions secretary and LCP consultant, said he was deeply depressed by the delay because it could mean more time wasted.

The budget spells the end for any prospects of serious progress on pension adequacy, Webb said.

Announcing its pension review in July, the government said it would consider further measures to improve pension outcomes, including assessing retirement adequacy, and increase investment in the UK market.

Pensions experts fear that continued delays could jeopardize the retirement prospects of millions of savers.

A survey by the Institute for Fiscal Studies this year found that 30 to 40 per cent of savers in defined contribution schemes have retirement incomes below the minimum retirement living standard set by the Pensions and Lifetime Savings Association trade body. It appears that you will have .

PLSA's Director of Policy and Advocacy, Zoe Alexander, said that from our perspective, this is causing us some concern because it is a very important piece of the puzzle in terms of the overall review.

I don't think there will be a moment to waste in getting this discussion going.

PLSA called on the government to gradually increase the minimum auto-enrolment contribution to around 12% of a person's salary.

Phoenix also said that a 15-year delay in implementing this increase could result in the typical 18-year-old losing about $35,000 in retirement savings.

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