The 2017 auto enrolment review published today confirmed that automatic enrolment will be extended to 18 years olds by 2020. Currently, legislation only requires employers to automatically enrol those aged over 22, earning more than £10,000 a year or £192 a week.
A survey*of 500 16-21 year olds conducted by NOW: Pensions reveals two thirds (66%) are not currently contributing to a pension. Despite this, 69% think being auto enrolled by their employer into a workplace pension before the age of 22 is a good idea to help them save for their retirement. This rises slightly to 70% amongst 18-21 year olds.
Of those surveyed, 64% say if they were auto enrolled they would remain in the scheme and wouldn’t opt out. This rises slightly to 66% amongst 18-21 year olds.
For over a third (38%), the main reason they would stay in is because they recognise the benefits of saving from a young age. Those that would opt out (36%) would do so in the most part because they believe wouldn’t be able to afford it (12%).
Adrian Boulding, Director of Policy at NOW: Pensions said: “Extending auto enrolment to 18 year olds is a complete no-brainer. Young people want to do the right thing and save for their future and auto enrolment would make it easy.
“The bottom line is, the sooner you start saving, the easier it is to build a decent sized pension pot as not only are you contributing for longer but your money has longer to grow.”
Low awareness of auto enrolment
These findings come despite the fact that awareness of auto enrolment amongst this age group is currently low with over half (55%) of 16 to 21 year olds unaware of auto enrolment. This increases amongst 16 and 17 year olds of whom two thirds (68%) had not heard of the legislation.
Over two fifths (45%) of 18 – 21 year olds surveyed say they currently earn over £10,000 a year or have weekly earnings over £192 whereas only 18% of 16 and 17 year olds earn a similar amount.
This corresponds with data from the Office for National Statistics which shows that around 1.1 million 18-21 year olds have annual earnings over £10,000 so that would qualify to be auto enrolled under the current rules compared with just 100,000 16 and 17 year olds.
Notes to editors
*Research conducted online by Opinium with 500 18-21 year olds between 6-8 December 2017.