Failure to reduce the upper age limit on auto-enrolment into workplace pensions from state pension age (SPA) may mean workers near retirement will lose their savings to means testing, Aegon says.
Pensions minister Steve Webb today announced automatic enrolment into workplace schemes will only apply when a person earns more than £7,475 per year.
The earnings band, in line with the income tax threshold set to be introduced next April, is considerably higher than the previously proposed level of £5,035.
Auto-enrolment will apply to everyone in employment aged 22 to SPA, which will reach 66 by 2020.
But Aegon argues in its response to the review that the upper age limit should be reduced initially to 55, as workers already near retirement who have not saved previously risk losing any new savings to means testing.
"Aegon has repeatedly argued that changes were needed to give auto-enrolment the best chance of a really successful start," pensions development manager Kate Smith says.
"We are disappointed the government has chosen not to reduce the upper age limit for auto-enrolment from state pension age and will be interested to see how the government intends to communicate with this group in particular."
However, Webb said today it is unlikely that many people will end up being worse off with auto-enrolment than they would be with means tested benefits, as many of the people covered by auto-enrolment are part of households with overall incomes lifting them out of means tested benefits.
Aegon also recommended in its review response the earnings threshold for auto-enrolment should be £10,000 per year, and that micro-businesses should be excluded.
All-day event on 24 April
Consequences could be more severe than in stress tests
AFH has six segregated mandate funds
Variable operating expenses