Selaine Saxby MP is backing plans to extend pensions auto-enrolment to everyone aged 18+ and for part-time workers, which leading research shows will add £3.5 billion to the pensions savings of workers in North Devon.
Auto-enrolment into pensions was introduced in 2012 by the Conservative-led Coalition Government and as a result the amount of people saving towards a pension in addition to their state pension has increased from 46.5% to 77.6%. But auto-enrolment is currently limited to workers aged over 22 who earn over £10,000 a year. This excludes many part-time workers who earn below the threshold – or have multiple jobs - and also means that the half of young people who start work or an apprenticeship at 18 do not get the benefit of auto-enrolment for the first four years of employment.
It is time to level up pensions for everyone - by abolishing the earnings trigger and reducing the age at which people benefit from auto-enrolment to 18 years old. Doing so would help individuals and their families to save for the future and generate trillions in capital for pension funds to deploy towards infrastructure, housing and other investments central to the Government’s economic ambitions.
A report by Onward highlights the significant benefits that extending auto-enrolment would bring to the pensions of millions of British workers:
- While part-time workers across the United Kingdom would benefit from these changes, constituencies outside London, would benefit most, with regions such as the South West, Nottinghamshire, Cumbria, Lancashire as well large parts of the Midlands, and North of England set to benefit the most.
- The changes would mean that UK workers’ pension pots would swell by £2.77 trillion. This would help provide long-term security for millions more pensioners, levelling-up their retirement as well as providing a steady stream of patient, long-term capital for investment across the UK.
- Currently, just 57.8% of part-time workers are contributing to a pension versus 86.4% of full-time workers. Women are far more likely than men to be in part-time work and to have multiple part-time jobs. This change would close the gap between men and women’s pension savings dramatically, helping millions more have healthier, happier and a more secure retirement.
Examples of how low paid workers would benefit are include those currently working part-time in two jobs, each paying £190/week seeing their pension pot triple over their lifetime to almost £300,000. Also, a young person in work from 18 earning the living wage would see their pension pot increase by £25,000 for just a few pounds a week paid in over those four years due to the over 45 years of compound interest they would accrue.
Selaine Saxby, MP for North Devon and member of the Work and Pensions Select Committee said:
“The extension of pension auto-enrolment to everyone aged 18+ and for part-time workers is estimated to increase total lifetime savings for workers across North Devon by £3.5 billion. This long-term change would significantly improve the savings rates of thousands of hard-working constituents and boost their pensions, especially part-time workers and women.
Everyone across North Devon deserves to have a secure and healthy retirement after a lifetime of work.”
Will Tanner, Director of Onward UK said:
“Extending auto-enrolment to everyone would achieve two of the Government’s key objectives in one fell swoop. It would massively boost the savings rates of some of the least well off in society and it would unlock billions in capital to be deployed towards levelling up and boosting growth.
“Even better, it is a simple, well-understood system that already exists, meaning reform would be uncontroversial and straightforward to achieve. The Government has already indicated it will look at this; it is time to make good on those promises.”
