The starting age for automatic enrolment into workplace pensions will be lowered from 22 to 18, under new government plans.
Auto-enrolment was introduced in 2012 and has seen participation in workplace pensions rise from 55% to 78% of all eligible employees in 2016 – an increase of around 6 million people.
Extending the scheme to include younger people will add an estimated 900,000 workers saving into workplace pensions, adding £770 million to annual savings.
As a result of auto-enrolment, the Department for Work and Pensions expects an additional £19.7 billion to be contributed to pensions annually by 2019/20.
Writing for The Guardian, David Gauke, secretary of state for work and pensions, said:
“We want to make sure that automatic enrolment is truly reflective of modern working practices and that everyone who could benefit from a workplace pension has the opportunity to do so.”
However, former pensions minister Steve Webb, director of policy at pensions firm Royal London, was not impressed by the pace of the reforms, describing them as “shockingly lethargic”.
Sir Webb said:
“Talking about having reforms in place by the mid-2020s risks leaving a whole generation of workers behind.
“Those who never got to join a final salary pension and who have only recently come into pensions through automatic enrolment need urgent action to help them build up a decent pension pot.”
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