The government estimates that around seven million people are not saving nearly enough for their retirement. Many people aren’t saving at all.
With life expectancy increasing, people will live longer in retirement and therefore the size of their pension fund needs to be larger to sustain this.
The maximum basic State Pension for individuals retiring in the 2019/20 tax year is just £168.60* per week. The actual amount depends on an individual’s NI contributions – normally at least 10 ‘qualifying years’ of National Insurance payments are needed to get any State Pension at all.
For most people without additional retirement savings, this may not be sufficient to make ends meet. It’s also possible that the government may not be able to afford to keep the State Pension at its current level in the long term.
Therefore, auto enrolment into workplace pensions was set up to help create a fairer financial system for everyone.