Rachel Reeves has called off a pension review to avoid further damage to UK business

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Chancellor Rachel Reeves has suspended the pension review over fears it could force employers to increase their contributions to pension pots by billions of pounds.

Reeves wants to avoid further pressure on business following the furore over his Budget, which hit employers with a $25bn fine to pay more insurance premiums.

Pensions Minister Emma Reynolds promised to launch a review of pension adequacy by the end of the year, but this has been delayed indefinitely.

Under current self-enrolment rules, workers must pay 8 percent of their occupational pension costs each year, 3 percent of which comes from employer contributions.

Many experts believe that such rates will leave many people without enough money for retirement.

Earlier this year the Phoenix Group, the UK’s largest retirement savings business, said that raising the number of self-enrolees to 12% could generate an additional £10bn a year, which would be shared between employees and employers.

But the Department for Work and Pensions told the Financial Times that it would not launch a second round of pension reviews this year, after being briefed that Reeves had blocked the move.

“Rachel is well aware that business is facing a huge tax burden and is keen to ensure that new business is not put on the back burner,” said a person familiar with the Treasury’s talks with the DWP.

In the first phase of the pension review, Reeves announced several “megafunds” schemes of £25bn each in contributions and local government pensions, a move which is expected to free up £80bn to spend on start-ups and infrastructure.

Although government officials insist that the second phase is not a “long straw”, no new date has been set. “It’s ‘TBC’,” said an official.

A DWP spokesman said: “We are determined to make sure that tomorrow’s pensioners are supported, which is why the government has announced a two-stage review of pensions days after they start working. The government will provide more information about the second stage soon.

Sir Steve Webb, a former pensions minister and adviser to the LCP, said the delay was “extremely disappointing” as it would take “years”.

“This budget was a killing spree in anticipation of significant progress on pension growth,” Webb said.

When the government announced the pensions review in July, it said it would “consider other ways to improve pension outcomes and increase investment in UK markets, including testing retirement adequacy”.

Pension experts are concerned that if the delay is delayed, it could jeopardize the retirement opportunities of millions of savers.

A study from the Institute for Fiscal Studies this year found that 30 to 40 percent of fixed-income investors are about to have retirement savings that fall below the retirement age set by the Pensions and Lifetime Savings Association. .

“It makes us worry because our view is that it’s very difficult to review,” said Zoe Alexander, director of policy and advocacy at PLSA.

“It seems to us that there is not a moment to lose in the matter of controversy.”

The PLSA has asked the government to gradually increase the self-registration fee to 12 percent of each person’s salary.

Phoenix said a 15-year delay in achieving this increase could result in an 18-year-old losing around £35,000 in career savings.