Although auto-enrolment is an undeniable success, its eligibility criteria means that it excludes those most in need argues Portal Financial.
The criteria states, that to be auto enrolled you must be between 22 years and state pension age and be earning over £10,000. It is reported that women are particularly affected, as the comprise nearly three quarters of people in part time work and 63% of people earning less than £7 per hour. On average, women already have lower incomes than men in retirement, so by being excludes from auto enrolment, this could continue for the forseeable future.
The scheme also excludes the self employed.
Managing Director, Jamie Smith-Thompson, of Portal Financial says “Auto-enrolment seems to have been a great success, with over half of 22-29-year-olds now saving into a pension and low opt-out rates across the board. But more needs to be done to include the people most at risk of insufficient income in retirement. It can be difficult to save when on low incomes, but a combination of employer contributions and tax relief can more than double the amount added by the employee, and with compound interest even small sums can really add up over the years.
“It’s true that people can opt-in to auto-enrolment if they don’t meet all the criteria, such as not having a large enough salary, but we know from the low opt-out figures that most people are keen to stay in but needed a nudge to start saving into a pension.”