The Association of British Insurers (ABI) has called on the government to to expand its pensions “auto-enrolment” scheme, following a review of the policy’s successes since it came into force a decade ago.
The ABI said the government should set out plans to expand its auto-enrolment policy, which requires employers to automatically enroll all staff – who are older than 22 and earn salaries of more than £10,000 a year – into their workplace pensions schemes.
The report says the government should reduce the earnings threshold and accelerate its plans to lower the minimum enrolment age to 18, as it warns that self-employed people and those with multiple jobs that pay less than £10,000 each are currently being excluded from the pensions scheme.
The insurers’ trade body said the government should also consider increasing minimum contribution rates from current levels of 8 per cent, to 12 per cent over the next 10 years, to ensure employees save more.
The paper notes that women and ethnic minorities are currently most impacted by the current thresholds, due to the fact they are more likely to be lower paid and in multiple jobs.
Hannah Gurga, Director General at the ABI said: “Automatic enrolment has transformed workplace pension savings in this country.”
“But the challenge remains to ensure people are saving enough for their retirement. For the next 10 years, we need a detailed plan for getting to higher contributions.”
Dr Yvonne Braun, Director of Policy, Long Term Savings and Protection, at the ABI said: “The huge success of automatic enrolment reflects a long-term plan based on consensus between political parties, industry and employers.”
“We need the same approach now to determine the future of the policy, ensuring more people are included and are saving enough, with the right level of flexibility.”
“Our report describes the key steps for the next chapter of automatic enrolment and sets out specific recommendations to adapt and evolve the policy.”