On Friday 6 April 2018 the next stage of automatic enrolment will take place, with minimum contributions rising from 2% to 5%. As a result, an additional £6.4bn will be added to UK savers’ pension pots in 2018/191.
Automatic enrolment has done a great job at helping to reverse the decline in pension saving in the UK so far, and will result in an additional £13.3bn in pension saving by the end of the decade2. However, with 13.6 million people3 currently not saving enough to achieve a decent income in retirement4 phasing is an essential next step in the automatic enrolment journey.
Tim Gosling, Policy Lead: Defined Contribution, Pensions and Lifetime Savings Association, said:
“Automatic enrolment has so far seen nearly 10 million employees enrolled into a workplace pension scheme and benefit from employer contributions. Now it’s time to look to the next stage of the process, where overall pension contributions are set to increase. This step is vital because despite the success of automatic enrolment, the majority of people are still not saving enough to meet their retirement goals.
“During the same month many savers will benefit from other changes, with both the personal allowance for income tax and the national living wage set to rise in April5.
“Workplace pensions remain the best, and simplest, way to save for a good income in retirement. And it is vital that people do not put off saving into a pension until later in life unless absolutely necessary. The longer people save the more they will benefit from employer contributions and the larger their final pot will be.”