Major DWP pension warning issued to millions of workers
Changes aimed at helping people save for retirement, government says
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Your support makes all the difference.Workers could start paying into their pensions earlier and begin making contributions as soon as they start earning under plans aimed at helping people save for retirement.
The age at which eligible workers must be automatically enrolled into a pension scheme by their employers would be lowered from 22 to 18 in proposals supported by the Department for Work and Pensions.
The lower earnings limit would also be removed, meaning employees would have to start paying into their pot as soon as they start earning.
Under current rules, which are reviewed annually, employees start paying pensions contributions after they’ve earned more than £6,240 in a financial year.
Workers can opt out if they don’t want to be on the scheme. Those who do save contribute 5 per cent of their earnings above £6,240 a year, including tax relief.
Employers make a contribution worth 3 per cent of earnings, which is automatically saved into a pension pot which is invested.
Jonathan Gullis, the MP for Stoke-on-Trent, has proposed changes to how automatic enrollment pensions work in a private members’ bill going through parliament.
If implemented the plans would affect millions of people across the UK and make “saving the norm for young adults”.
Mr Gullis said: “Auto-enrolment of pensions will benefit scores of young people in all four corners of the country.
“With all the evidence of the huge positive impact it can have, it is a no-brainer that we now need to extend auto-enrolment to those aged 18 and above.
He added: “I am confident this Bill will make a huge difference to people from Kidsgrove to Consett.”
Laura Trott, the minister for pensions, said: “We know that these widely supported measures will make a meaningful difference to people’s pension saving over the years ahead.
“Doing this will see the government deliver on our commitment to help grow the economy and support the hard-working people of this country, particularly groups such as women, young people and lower earners who have historically found it harder to save for retirement.”
Around 12.5 million working-age people are undersaving for retirement, according to a government analysis of pensions data. Lower earners are more likely to be undersaving.
At present, more than 10 million people are receiving state pension payments.
State pension payments are set to rise by 10.1 per cent for approximately 12.6 million people across the UK from April.
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