Home Business NewsBusiness Expanding automatic enrolment to young and low earners ‘could boost pension savings by £2.8 trillion’

Expanding automatic enrolment to young and low earners ‘could boost pension savings by £2.8 trillion’

by LLB Reporter
5th Jan 22 11:43 am

The Government is facing growing pressure to expand its automatic enrolment reforms.

Conservative MP Richard Holden expected to use a Private Members’ bill today to urge policymakers to:

– Lower the age at which workers are auto-enrolled into a pension from 22 to 18

– Scrap the £10,000 earnings threshold so lower earners are included in the reforms

– Report published by think-tank Onward today suggests that the measures, combined with ditching the earnings band so every pound earned qualifies for a matched employer contribution, could boost pension savings by almost £2.8 trillion.

– The previous Government committed to lowering the minimum auto-enrolment age to 18 and scrapping earnings bands by the ‘mid-2020s’ – although this was before COVID struck

Tom Selby, head of retirement policy at AJ Bell, comments: “Expanding automatic enrolment to younger workers and ditching both the earnings trigger and earnings bands would put rocket boosters under millions of employees’ pensions. It would also bring millions more people into the pension system.

“A full-time worker on the National Living Wage could gain over £90,000 over their working lifetime under the plans, according to Onward, while younger workers could save an extra £20,000 for retirement on average.

“In fact, the Government – albeit under different leadership – previously committed to lowering the age at which people are auto-enrolled from 22 to 18 and ditching the earnings band, so every pound earned qualifies for a matched employer contribution, by the ‘mid-2020s’.”

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