2017 Auto Enrolment Review: 8% will finally mean 8%

For immediate release: 18 December 2017

Commenting on the 2017 auto enrolment review, Adrian Boulding, Director of Policy at NOW: Pensions said: “Basing auto enrolment minimum contributions on every pound of earnings sounds like a small technical change but it’ll result in a huge improvement to savers’ pension pots.

“It’s a complete nonsense that the first £5,876 of a worker’s salary isn’t included when calculating auto enrolment contributions. This lower band of earnings affects most auto enrolled savers but is particularly damaging for low paid and part time workers, the majority of whom are women. It means that for somebody earning £10,000, just £4,124 of their salary counts for the purposes of auto enrolment so even when contributions increase to 8%, only 3.3% of their earnings would count.

“By 2020 an 8% contribution will, for most people at least, mean 8%. But, with the upper earnings limit still in place, higher earners (currently those earning over £45,000) still won’t receive the full headline contribution. All savers should receive 8% so this upper band should also be reconsidered.

“But, 8% still won’t be enough and the government can’t continue to bury its heads in the sand. A roadmap for increasing contributions beyond 8% needs to be set out, and this needs to happen sooner rather than later. Remember it’s taken more than a decade to reach just 2% of qualifying earnings!”

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For further information:

Amy Mankelow / Cheriton Lee

NOW: Pensions

Tel: 07887 604640 / 0203 948 9236

amy.mankelow@nowpensions.com / cheriton.lee@nowpensions.com

 

Irene Kyme

Cicero Group

Tel: 0207 343 1600

irene.kyme@cicero-group.com

Notes to editors

NOW: Pensions www.nowpensions.com @nowpensions

NOW: Pensions is one of the UK’s largest workplace pension providers with over a million members and tens of thousands of employers from a wide range of sectors. A company wholly owned by Danish pension scheme ATP; one of Europe’s largest pension funds. NOW: Pensions entered the UK market in 2011 with a simple and cost effective workplace pension designed specifically with the auto enrolment market in mind.

...its simple design means the pressure is taken off us as the employer and avoids costly administration charges, whilst removing the burden of choice and ensuring the best possible retirement outcome for our employees. — Matthew Johnson, Head of Compensation and Benefits at Adecco Group UK & Ireland
“We were impressed with the simplicity of its scheme. The ease of implementation was also a big plus for us and has removed much of the administrative headache.” — Neil Tune, HR director at Fitness First
I am backing NOW: Pensions, the ATP project, because I believe it will encourage transparency, low costs and decent returns for millions of British employees. — Nigel Waterson, former Shadow Pensions Minister
There is a need for a member-centric solution designed for ease of use with low costs and cutting edge investment strategy, which delivers long term stable returns. ATP's in-house investment capabilities, combined with our novel and innovative… — Lars Rohde, Governor of the National Bank of Denmark and Former CEO of ATP Group
NOW: Pensions is supportive, easy for our employees to understand and uncomplicated in terms of its implementation. Its structured approach removes the complicated investment choices & makes auto-enrolment a straightforward and simple process. — Mark Manaton, Managing Director, Blue Arrow Group