Warning as 10m take up workplace pensions
MORE than 10 million people have been placed into workplace pensions as a result of automatic enrolment – but experts warn savings levels will still not provide many people with a comfortable retirement.
Figures released by the Pensions Regulator show over 10 million eligible jobholders have been placed in a scheme as a result of the landmark savings drive.
It helps workers get into a pension savings habit – with employer contributions also helping savings pots to grow.
But not everyone is eligible and there are also concerns that people are not saving enough to give them the living standards they would want in old age.
Alistair McQueen, head of savings and retirement at Aviva, said the figure is a “significant landmark”.
But he said that, even with a further increase in the minimum amounts that can be contributed into pensions set to happen in April, “current savings levels will not provide many people with a comfortable retirement”.
He added: “Many people will be facing retirement with an income worth less than the minimum wage.
“While we should celebrate passing the 10 million mark, it is also the time to increase our efforts and continue emphasising to people the importance of saving for retirement.“
Baroness Ros Altmann, a former pensions minister, said many women and the lowest earners are not covered by the scheme. She said: “Although autoenrolment has brought millions of low earners into pension saving for the first time, it only covers those who earn more than £10,000 a year with an employer.
“Many part-time workers, mostly women, who earn less than this level, or who have more than one employer and earn below £10,000 from each one, are left out of the auto-enrolment process. They lose out on help from their employer towards their retirement income.“
She said there are also concerns about people who are self-employed being left out.
Tom Selby, a senior analyst at AJ Bell, said: “Successive governments deserve credit for shepherding auto-enrolment to this historic landmark.
“But the reforms are neither complete nor working perfectly.“
Tom McPhail, head of policy at Hargreaves Lansdown, said the low opt-out rates among workers who are placed into workplace pensions mean that “the behavioural theory behind the policy design is working brilliantly”.