David Bird, Head of Proposition Development, LifeSight, Willis Towers Watson: “Today’s planned increase to auto-enrolment contributions is welcome as it begins the move towards reaching a higher level of pension savings for many which will improve retirement incomes for millions of future retirees. We must also recognise that this increase is challenging for both employees and employers. Some reports estimate that the rise could take a fifth of the average employee’s available spend from 2019 – a difficult situation for workers who are already struggling.
The risk is that employees – particularly younger workers – may opt-out of workplace pension schemes altogether. This could be harmful to their retirement savings, especially given that people are, on average, working for longer. It is crucial that employers help those thinking about opting out to understand the benefits, using easily accessible, jargon-free communications. This will help raise awareness of the changes that are expected and provide guidance to ensure they continue saving sufficiently for their retirement.”
Andy Tarrant, head of policy at The People’s Pension, the second largest master trust in the UK, said: “As auto-enrolment faces this pivotal moment, the pensions industry, employers and the government have a responsibility to ensure that savers understand the long-term benefit that these increases will bring.
“While putting a little extra into a pension pot may feel like a financial squeeze for some people, it’s hugely important to remember the significant increase to their savings that will come from their employer. This change means employers are required to put in double the amount of free money towards their employee’s pension pots than they currently have to. Over time, this, combined with the top-up they’ll get from the government, will all rack up and make a huge difference to people’s futures.”
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