Are too many people being excluded from auto enrolment?

Adrian Boulding, Director of Policy, NOW: Pensions

Data published by The Pensions Regulator has shown that almost 10 million people have been auto enrolled since the scheme began in 2012.

But, despite this encouraging headline figure, over nine million people have been excluded. This figure has risen by 1.67m over the past year.

This large number of exclusions does beg the question – should the auto enrolment qualifying criteria be reviewed?

Remove the £10,000 auto enrolment trigger

At NOW: Pensions we’ve long campaigned for the £10,000 auto enrolment trigger to be removed as it excludes huge numbers of part-time workers, the majority of whom are women.

Analysis by the Pensions Policy Institute commissioned by NOW: Pensions shows that over 50% of part-time workers earn less than the auto enrolment trigger and 81% of part-time workers are women.

If the auto enrolment trigger was removed, 3.3 million more individuals would become eligible for automatic enrolment. Of these, 2.5 million would be women.

Lower the age people are auto enrolled to 18

One of the recommendations in the 2017 auto enrolment review was to lower the age at which people are auto enrolled from 22 to 18.

Research we conducted with young people shows that the vast majority would be supportive of this with 70% of 18 to 21 year olds saying they thought being auto enrolled would be a good idea to help them save for their retirement.

Lowering the age of auto enrolment to 18 would allow a further 900,000 people to begin saving for their retirement.

With a few simple changes to the regulations we could make auto enrolment even more inclusive. Young people and part-timers won’t make large contributions, but when it comes to saving for retirement, every penny makes a difference.

 

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