Proposed changes to the UK’s auto-enrolment system by Richard Holden, MP for North West Durham, could add “trillions of pounds” to the country’s pension pot.

He is introducing a ten-minute rule Bill this evening to Parliament – Pensions (Extension of Automatic Enrolment) Bill – in which he proposes an extension to the UK’s pensions auto-enrolment to all those aged over 18 and including part-time workers.

In a House of Commons address, he stated that this change to auto-enrolment would see “trillions of pounds in long-term savings levelling up the retirements of workers – especially women – in the towns and villages of North West Durham and across the country”.

A report by think tank Onward – Levelling up pensions – stated that these changes could add £2.77trn to pension saving.

“As the Prime Minister seeks to ‘build back better’ from the global pandemic, will he throw his weight behind these important changes that will benefit workers across our United Kingdom?” Holden asked PM Boris Johnson.

Johnson noted that over 10 million people in the UK have automatically enrolled into workplace pensions already, putting another £28.4bn into pensions.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said Onward’s report gives 2.77 trillion reasons why further reform to auto-enrolment is needed.

“Auto-enrolment has boosted retirement prospects for millions of people but we can’t ignore the fact that women, young people and part-time workers are still missing out. Changes to age and earnings limits mean workplace pensions can be accessed by millions more people who could see their pensions increased by thousands of pounds,” Morrissey noted.

“The idea of contributing to a pension as soon as you start work will also become normalised,” she added.

Underpensioned and over-aged

Samantha Gould, head of campaigns at NOW: Pensions, welcomed the recommendations put forward by Holden, adding however, that while more people have the opportunity to save, the number of underpensioned people in the UK has grown to 2.8 million.

“Underpensioned groups such as single mums, carers or people with disabilities don’t choose to be underpensioned, but the current rules mean they’re not eligible to be auto-enroled,” she said.

Gould added: “We have long campaigned for the changes outlined in today’s Bill and it will help tackle the growing gap between those who can save into a pension and those who can’t.”

Phil Brown, director of policy at B&CE, provider of The People’s Pension, said: “We have long argued that younger workers should be given the opportunity to save for an extra four years towards their retirement and we trust that the government will honour its proposals to lower the age threshold for automatic enrolment from 22 to 18 once economic circumstances allow.”

Brown said that it made “complete sense” to allow workers to benefit from auto-enrolment for the entirety of their adult working lives.

The Pensions and Lifetime Savings Association (PLSA) also backs an improved auto-enrolment system by extending it to workers under 22 and removing the Lower Earnings Limit (LEL).

Nigel Peaple, director of policy and advocacy at the PLSA, commended the intent of the proposal to remove the  £10,000 earnings threshold to support workers on very low earnings or with multiple jobs. However, he said, additional analysis may be necessary to ensure it will benefit households at all income levels.

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