Pensions UK has urged the government to set a clear timetable for increasing automatic contributions.
Automatic enrolment has brought millions more people into workplace pensions saving, but according to Pensions UK, minimum contribution levels remain too low for many savers to achieve an adequate income in retirement.
The association has long argued that minimum contributions should rise gradually from 8% to 12% of qualifying earnings overall, split evenly between employers and employees, with the final position reached by 2035.
It is now calling for the government to introduce phased increases that are “predictable” and supported by a clear roadmap, so that employers can plan and workers can benefit from higher savings without any sudden pressure on household budgets.
This comes as research conducted by the association found strong public concern about under-saving and clear signs of employer support for increased minimum automatic enrolment contributions, provided changes are introduced gradually.
Some 57% of the working-age adults surveyed by Yonder Consulting for Pensions UK are not confident they are currently saving enough to maintain their standard of living in retirement, with more than four in five people (82%) seeing under-saving for retirement as a big issue in the UK today.
Almost three-quarters (74%) expressed a view on whether contributions should increase, decrease or stay the same, of which just under a third of the total (31%) believe the amount saved into pensions through automatic enrolment should increase, compared with the 3% who think it should decrease.
Employers are also widely supporting the increases, as long as they are phased. The survey found that more than 70% of employers of small (71%) and medium-sized (79%) businesses support increases, provided businesses are given two years to prepare (79%), and increases are phased (80%).
Zoe Alexander, chief policy officer at Pensions UK, said: “With the Second Pensions Commission finalising the package of proposals that will form its final report due next spring, we are approaching crunch time for political decision-making on pensions adequacy.
“Increasing automatic enrolment contributions to 12%, shared equally between employers and employees, is the right decision to deliver long-term household financial security, something this government has said it cares deeply about.”
Alexander added that a gradual, predictable roadmap would give employers the certainty they need, help savers adjust and build the consensus needed for a fairer and more adequate pensions system.
