Four years ago, an independent review of auto enrolment recommended a number of improvements to the government’s flagship policy to be implemented by the mid-2020s. This included opening up auto-enrolment to younger workers by reducing the minimum age from age 22 to 18, so they could automatically benefit from employer pension contributions, and removing the salary offset, currently £6,240 a year, so that contributions were based from the first £ earned from the mid-2020s. Both these initiatives would have allowed more people, especially those on lower incomes to have saved more in the pension via their own and their employer’s contributions, improving their financial wellbeing over the longer term.
“For many, the 8% minimum auto-enrolment contribution is unlikely be build a lifetime of financial security, and the harsh reality is that people will need to save more one way or another. The increase in national insurance contributions will make this more challenging for some.
“Faced with increased National Insurance Contributions employers may baulk at any changes to auto-enrolment which would further increase their costs, let alone any increase in the 8% auto-enrolment contributions. This in turn may discourage government from forcing employers to do this until the next decade. Instead it will be up to the pension industry to work with employers to encourage employees to save more, where they can afford to do so.”
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