Hike pension contributions, say MPS

AUTOMATIC pensions enrolment is key to funding a new era of retirement which is increasingly reliant on private savings rather than the public purse, MPS will say today – but it relies on contributions being hiked.

The pensions triple lock in particular will become too expensive and will have to be scrapped, leaving pensioners in need of more private incomes, the Treasury select committee said.

As many as 12m Britons are saving too little for their desired retirement lifestyles and so more increases are needed in the auto-enrolment payments – the level which employees pay unless they opt out.

To avoid people opting out this should be done subtly, the MPS said, for instance by raising the rate of contributions when a worker gets a pay rise. The problem of under-saving will become more pressing when the Government ends the triple lock on state pensions. This lock guarantees the state pension rises in line with the highest of average earnings, inflation or 2.5pc.

“Many households are facing challenges that are putting pressure on the health of their finance,” said Nicky Morgan, chairman of the committee.