03 March 2023
If you are covering the DWP’s analysis of future pension incomes released this morning, please see the following comment from Jon Greer, head of retirement policy at Quilter:
“New data out this morning paints a grim picture of the retirement landscape with a huge proportion of the UK are under saving for their retirement. The DWP estimate that 38% of working age people equivalent to 12.5 million are under saving. Many people imagine the day they down tools and are able to enjoy their golden years after years of hard work but at this rate for over a third of the UK population this is nothing but a pipe dream.
“Although Automatic Enrolment has had a transformational impact on how many people are saving for retirement, these stark figures make a case that this excellent policy now needs some fine tuning to ensure it drives more people into saving for retirement. If the government and general population do not start taking this seriously millions face a retirement in poverty relying on a meagre amount more than just the state pension.
“Likely due to the cost-of-living crisis, the DWP earlier this year opted to keep the Automatic Enrolment (AE) earnings trigger, the point at which an individual's salary opts them in for automatic enrolment to their workplace pension scheme, at £10,000. Additionally, the DWP chose to freeze the lower earnings limit, the point from which an individual's earnings are used to calculate the amount of pension contributions that will be paid into a scheme, at £6,240.
“All this is understandable given the state of people’s finances at the moment, but we need to act sooner rather than later and help people save more for their retirement by implementing some of the proposals surrounding Automatic Enrolment that were put forward in the government’s 2017 review. These included lowering the age threshold for Automatic Enrolment from 22 to 18 and looking at the qualifying earnings band.
“The government have committed to implementing these recommendations when parliamentary time allows and a private members bill was introduced to the house at the end of February but this is unlikely to become legislation. This should be an area of policy that the government are ploughing time and effort into so that we can speed up the pace of change.”
