Extension of AE to 18 year-olds edges closer but reaction unknown given financial pressures

Jon Greer, head of retirement policy at Quilter comments on the third reading of the extension to Automatic Enrolment bill in the House of Lords today. The statement can be seen below:

Today, as the private members bill on the extension of automatic enrolment takes centre stage with its third reading in the House of Lords, the pensions minister Laura Trott has being doing the media rounds drawing attention to the pivotal changes it would enable.

Central to the bill is the ability to extend pensions automatic enrolment to those employed under the age of 22, a move that signifies the government’s intent to bolster the future financial security of younger workers. The inclusion of provisions concerning the lower qualifying earnings threshold for automatic enrolment further emphasises a commitment to ensuring that even those at the more modest end of the earning scale are not left behind.


There is no doubt that these reforms are needed to adapt pension policy to the evolving needs of the workforce and an ageing population that may end up needing to lean on a pension for decades. In fact data out today, about the number of people living to over 100 shows that it has increased 127-fold over the past century. These people have half their life to save (about 50 years) to support themselves in retirement for a third of their life (about 32/33 years). This is no mean feat and the government need to be doing everything they can to help people save as much for retirement as possible.

The proposed changes in the bill, especially the ability to include younger employees in the automatic enrolment scheme, reflect the government’s desire to normalise pension saving or young adults enabling them to start saving from the beginning of their working lives. The changes recognise the importance of starting retirement savings early and maximising the benefits of compound returns over time. However, considering the enormous pressure on people’s finances, and particularly the young, the timing of the changes will be key and the reaction of younger workers, if implemented swiftly during this cost of living crisis when every pound counts, is unknown. However, there is no doubt that the government moving towards adopting some of the recommendations of the 2017 Automatic Enrolment Review is a good thing as while the policy has had runaway success it must evolve to stay relevant.

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