“Auto-enrolment has been a huge success, which has prompted millions more people to start saving for a more secure financial future. However, thousands of individuals are still slipping through the net, particularly lower earners, young people (those aged under 22) and a higher proportion of women with earnings below the automatic-enrolment threshold, with many working part-time or in multiple jobs and missing out on employer pension contributions as a result.
“The good news is that changes are being considered that we support and have previously called for, which will boost the number of people enrolled into a workplace pension and the amount they save for retirement. The lowering of the pensions auto-enrolment age from 22 to 18 and the scrapping of the lower earnings limit will see people benefitting earlier and from the very first pound that they earn.
“Looking at the impact of these changes on retirement pots, we have mapped out what the eventual pension pot size would be at retirement for 18-year-olds coming into the workforce under the new reforms, compared to those that were auto-enrolled at the age of 22 under the current legislation. If the changes were to be implemented tomorrow, the average man saving into a pension now would have an additional £430,694 in their pension pot once they reach 65, a 47% increase in the value of their pot. Whilst a woman would see their pension pot grow more significantly but from a much lower starting point: an 87% increase, which amounts to an additional £378,997 in pension savings by the age of 65.
“Once the Bill has received Royal Assent, we suspect the Government will consult on how best to implement these changes. One scenario could be phasing the implementation of changes over three years, which would see the value of pension pots for a man increase by £420,296, and £369,199 for a woman.
“Whilst the reforms go some way to closing the gender pensions gap, still more needs to be done to level the playing field. We think there is an opportunity to explore the issue of people, often women, working multiple jobs. These are often people who earn above the £10,000 auto-enrolment trigger if you totted up all their income but earn less than this in each individual job. These people often slip through the net which leaves multi-jobbers and freelancers and those who are part of the gig economy missing out.”
|
