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The disagreement came after Webb - also a former pensions minister - appeared alongside Altmann and Drake at a Work and Pensions Committee (WPC) evidence session yesterday (8 June) where the three were asked to give their thoughts on strategy for the implementation of the 2017 auto-enrolment (AE) review.

Webb - now a partner at Lane Clark & Peacock - told the WPC that he had "kind of given up" on the implementation of the review which was delayed again in April after the Department for Work and Pensions told the WPC it wanted to carry out further engagement with the industry.

Changes to the AE framework that the government committed to back in 2017 were designed to "enable people to save more and to start saving earlier" and include the lowering of the age threshold from 22 to 18.

"Implementation of this was the mid-2020s but now it's ‘as time goes by'," Webb said. "I think that was the phrase that was used. There is good stuff in it, but it wouldn't really be a game changer for most people. It's incremental, but it's not a game changer."

Webb instead suggested the alteration of the AE contribution model to 5% employer and 5% employee ratio, as outlined in his keynote presentation at PP Live on 17 May.

 "If you can't get over a wall, my motto is to go round it," he told the WPC. "I can't think of a country in the world where workers have to put in more than their employees, so at some point, we've got to level to five plus five.

"For me, it would be a simple thing to do and that is the beauty, the pensions industry complicates things."

With the state pension set to be £10,000 next year, Webb argued that the current AE threshold - also £10,000 - should remain the same.

"We have to think quite carefully about saying to someone on £8,000 a year that an employer is going to put money into their pension - taking from that £8,000 a year - to top up their retirement fund of £10,000 a year.

"Economics would say that's the wrong way round. You cannot smooth from a low income time to a high income time, so I don't buy this argument that people on £8,000 a year in a world where the state pension is £10,000 a year should be auto-enrolled."

But Webb's suggestion to limit AE to savers meeting the current minimum was not welcomed by Drake, who argued that the situation for many savers was more nuanced.

"People's participation in the labour market, particularly women's, changes all the time," she said. "You may have periods of low earnings, but your lifetime earnings justify that you should save more than what may be your lower earnings a point in time if you've got two children under three; you are on quite low earnings while they grow up for example.

"With pension freedoms where you don't have to now secure a pension, why is it that the lower paid can't use the benefit of AE and employer contribution and tax relief to build a little asset base to give them resilience in old age? Why must they only depend on sort of smoothing of income that public policy gives them?" she questioned.

"There will be some workers that need to be excluded, but I just think anyone at a point in time where they are on £8,000 or less being excluded on the basis that there is no merit in them saving, I just don't agree with."

Baroness Altmann said she "heartily echoed" Drake's comments.

"As the WPC has pointed out, many women will be in more than one job that may pay less than £10,000 but they are therefore completely excluded from AE at the moment because of the threshold," she explained. "I have serious concerns and I think it is really important that we do not discriminate against the lower paid because of their pensions."

Altmann argued it was a basic case of lower earners missing out on what was being given to higher-earning counterparts saying the action "seems the wrong way round".

But she opined that however much a pension saver may have above the state pension level was "an individual responsibility".

"We've been lulled into this idea that employers should do pensions because of the traditional defined benefit scheme, but in most cases, this comes out of the labour costs pot," she said. "If you tell employers they need to put more into a pension, people will get less pay, and I would rather leave it up to them to decide whether they want to put their extra pay into a pension or have it now."

But Webb argued that employers moving contributions up by two percentage points was not as "onerous" as painted.

The example of the entirely DC Australian system, which rose in increments from 3% to 6% to 9%, was given.

"That's all on the employer, that's not the employee," Webb argued. "That is what [people in Australia] expect when companies employ them. The UK says it is the best system in the world and yet we whinging about going beyond 3%.

"If we are serious about pensions, we have got to get serious money going in and 3% for an employer is a joke in the long term."

"You could say to employers that at some point, more money has got to go in," he concluded. "Someone has to do something uncomfortable."

With much of the focus on changing thresholds and whether employers or savers should shoulder more of the cost, Baroness Drake told the commission it was also essential to keep all employers in AE.

"A key gap previously was workers in micro- and many medium-size employers who were under saving or not saving," she explained. "It's absolutely essential that with any level of increase in contributions, staging and phasing that is driven by catering the whole of the employee population, not just looking at the bigger companies.

"You also have to give plenty of notice, you need to come out and declare what you're going to do on contributions so keep people can start preparing," she stated. "If you're going to go for it, go for it and state what it is."

Altmann agreed, asking for the WPC to consider "whether it is right that we force the employer to keep paying more and more into people's pensions, when the employer is already paying quite high national insurance to provide the basic state pension".

Yesterday's WPC evidence session forms part of its research gathering for the final part of it's major three-part inquiry into the success of pension freedoms between 2015 and 2020.

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