Widespread support for extension of AE

Majority of people support compulsory pension contributions, bring lower paid and self-employed into automatic enrolment regime.

The majority of people in the UK now support mandatory pension contributions, according to new research.

Two-thirds of respondents (66 per cent) support this move according a survey by pension consultants LCP, conducted by YouGov.

This figures rises to 78 per cent among the 55-plus age group, suggests many in this age group regret not being forced to save more at a younger age, as the reality of retirement starts to bite. 

There was a divergence of views on what level of savings would be adequate with a gulf between younger and older generations. 

Around 11 per cent of 18-24 year old workers thought that savings between 1 and 2 per cent of their monthly salary would give them financial security in retirement. 

For those aged 45 or over, this proportion who thought this was an adequate amount fell to just 2 per cent.

Across the various age bands 43 per cent of respondents thought that the minimum someone should personally pay into their pension was 3-5 per cent of their monthly salary, while around a quarter (26 per cent) thought the minimum contribution should between 6-10 per cent.

Around 21 per cent of workers felt they should be saving at least 11 per cent of their salary.

LCP senior partner Bob Scott says: “This research suggests that people on the whole support compulsion in retirement savings to help them achieve greater financial security.

 “Auto-enrolment has been hugely successful in getting millions more people saving for their retirement.  But there is still some way to go. 

Auto-enrolment does not include low earners or the self-employed which means that there are still more than 10 million private sector workers who are excluded.  

Rates of opt-out have generally been lower than expected, which we hope will continue to be the case when contributions rise in April 2019. In the longer term, government should also plan for contributions to rise significantly above 8 per cent of qualifying earnings.”

He adds: “Whilst we were relieved that Chancellor Philip Hammond resisted the temptation in the Autumn Budget to tinker with changes to pensions taxation, we would urge the government to commit to policies that ensure meaningful levels of retirement savings. Making pension saving compulsory could move things forward.”

 

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