Report suggests raising auto-enrolment pension contributions to 12%

A new report by Phoenix Group and WPI Economics suggests that raising the minimum auto-enrolment pension contribution from 8% to 12% could boost annual UK pension contributions by £10 billion.
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A new report by Phoenix Group and WPI Economics suggests that raising the minimum auto-enrolment pension contribution from 8% to 12% could boost annual UK pension contributions by £10 billion. This increase is expected to significantly enhance retirement savings and economic investment.

The report, titled ‘Falling behind the curve,’ builds on previous recommendations and provides a comprehensive analysis of the economic and individual impacts of delaying increases in auto-enrolment contributions. For a typical 18-year-old, a delay of 15 years in implementing the increase could result in a £35,000 loss in potential retirement savings.

Andy Curran, CEO of Standard Life, part of Phoenix Group, commented: “Millions of UK adults are not saving enough for their future retirement income, so it is crucial we have a plan to support greater pension saving throughout people’s working life. Increasing minimum auto enrolment contributions is fundamental to addressing this challenge, particularly as many people are unengaged with their pension or have low confidence in their pension knowledge.”

Gail Izat, managing director for Workplace Pensions at Standard Life, added: “While the success of auto-enrolment has laid a solid foundation, more needs to be done to help people secure a decent standard of living in retirement. The single biggest lever government can pull to achieve this goal is raising minimum contributions when the time’s right for savers and employers. Long-term savings adequacy underpins the financial wellbeing and security of individuals and could help contribute to the success of the wider economy, while employers also have a lot to gain from a financially stable workforce and the potential additional investment in the UK.”

The report also calls for a new statutory requirement to support long-term pensions adequacy, suggesting that the government should carry out an assessment against economic indicators to decide whether the minimum rate should be raised.

Ryan Fowler

Ryan Fowler is Publisher of Workplace Journal

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