Responding to figures from the department for work and pensions, revealing that in the ten years since the launch of Automatic Enrolment (AE), employees across the UK had saved £114.6 billion into their pensions, Royal London pension’s expert Clare Moffat said:
“While the UK pension savings landscape has hugely benefitted from AE, the system needs to address inequalities that mean certain groups, in particular women, face limitations on their ability to save for retirement.
“Significantly fewer women than men are likely to meet the qualifying criteria for AE. Women also face a number challenges which can limit their ability to save for retirement. These include an unequal distribution of caring responsibilities, the menopause, which forces thousands of women to reduce their hours or leave work altogether and greater likelihood of working part time. Of employed women in the UK, 38% are working in part-time roles, meaning women are less likely to meet the £10,000 eligibility criteria to be automatically enrolled into their workplace pension. Reforms to lower the age from 22 to 18 and removing the lower earnings threshold will also significantly increase the number of people saving in a workplace scheme, and substantially increase the amount being paid in for lower earners.
“While now might not be the right time to implement a rise in contribution levels from the current rate at 8 per cent of earnings, we should at least start planning how contribution levels might rise in the future, to give employers and employees sufficient time to plan for the changes.”