A welcome pensions success story

“News stories about the future of pensions tend to come under the category of ‘we’re all doomed’,” says The Observer. How refreshing, then, to see some “strikingly positive” figures on the quiet triumph of auto-enrolment. In just four years, the number of private-sector workers saving into a pension has soared from 55% to 78% thanks to the scheme, which requires employers “to offer a pension, put their staff in it, and pay money in”. Opt-out rates among employees have been low. By any measure, auto-enrolment has passed its first big test; but now comes the hard bit of making the sums add up. Contributions right now are “puny”: under the current rules, employers only have to pay in 1% of salary, and employees another 1%. That “contribution rate” will rise to a total of 8% by 2019, but it will still mean big shortfalls given that experts reckon “you need to put aside at least 15% of salary to fund a decent retirement”. So far, auto-enrolment has caused “near-zero political controversy”. Expect that to change. Stepping up contributions to the necessary 15% “is going to hurt”.