Pensions reform to ‘level up’ savings with £2.8tn cash injection

A cash injection worth trillions could be added to the pension pots of workers in Britain if automatic enrolment is expanded.

Think tank Onward has shared that rules around auto enrolment should be expanded to include all employees over the age of 18 rather than 22, as well as those who earn under £10,000.

It noted that this move would provide an extra £2.8trillion to savings, while also helping more part-time workers and young apprentices, reported the Daily Mail.

Following these claims, Tory MP Richard Holden is set to bring forward draft legislation to make the reform happen years before the government’s plans intend to.

Commenting on the potential changes, Holden said that it could not show a “clearer intent towards long-term levelling up”.

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

“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.”

Automatic enrolment was first introduced in 2012, where employees automatically joined their employer’s pension scheme unless they chose to opt out.

However, currently this work perk is only applicable to those aged 22 and over and who earn more than £10,000 a year.

The new pensions bill aims to change that but will only be able to become law with ministerial support, which could be tricky to receive as the Department for Work and Pensions (DWP) has no plans to expand automatic enrolment until the mid-2020s.

Pension divide

Onward’s report estimates that the number of workers saving for their retirement has increased from 46.5% to 77.6% since automatic enrolment was put in place.

But there are still huge differences between the number of part-time and full-time workers contributing to a pension. In fact, around 57.8% of part-time staffers currently contribute, compared to 86.4% of full-time employees, shared the Express.

Statistics show that women are more likely than men to be in part-time employment, as well as have multiple part-time jobs, meaning they will lose out on saving opportunities.

With this in mind, the think tank believes the new legislation would help to close the gap between men and women’s pension saving opportunities.

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