Extending pension enrolment ‘could add £2.77 trillion to our savings’

EXTENDING pension autoenrolment to working 18-year-olds and for part-time workers could add around £2.77 trillion to British pension savings, a think tank has said.

The current auto-enrolment rules mean bosses must provide a workplace pension for staff aged 22 and over earning £10,000.

But Onward, which describes itself as a centre right think tank, said abolishing the earnings threshold and reducing the eligibility age to 18 would boost the savings for some of the least well-off while unlocking billions for investment.

Conservative MP Richard Holden is due to put forward a Private Member’s Bill in the Commons today which would extend auto-enrolment for pensions to millions of younger and part-time workers.

The MP for North West Durham said the changes would help close the gap between men’s and women’s pension savings and help millions of people have a more secure retirement.

He said: “Auto-enrolment has been one of the massive hidden triumphs of the last decade in the UK, but sadly millions of hardworking British people aren’t benefiting because they’re under 22 or simply not working enough hours. I want to change that.

“In 2017 the Government said that it would look at extending auto-enrolment by the mid-2020s but to hit those dates we need legislation now to make it happen and allow business time to phase in these important changes. That’s what my Bill will do.

“Nothing could show clearer intent towards long-term levelling up than ensuring that everyone who works hard will see a safer and more secure retirement and I hope that the Government backs my campaign for action now.”

In a report titled Levelling Up Pensions, Onward said the change introduced in 2012 to opt workers into pensions automatically saw the proportion of employees in a workplace pension rise from 46.5% that year to 77.6% in 2020.

The report said the current workplace pension participation rate is 20% for 16 to 21-year-olds and 58% for part-time employees. For full-time employees the figure is 86.4%, the think tank said.

A series of changes that would see the auto-enrolment age reduced to 18 and the earnings threshold scrapped could see up to £2.77 billion added to UK pensions over the working lifetime of the current workforce, Onward said.