Inadequate Retirement Income from Auto-enrolment Pensions

The number of employees signed up to auto-enrolment pensions has reached 7.5m based on the figures from Association of British Insurers. However, the low level of contributions by employees and employers is still too small to provide adequate future pension cover.

The premium income has also increased to £13.4bn in 2016 from £1.3bn in 2015. This has been mainly due to the introduction of auto-enrolment which forces employers to provide a work-based pension for full-time staff.

However, despite the contribution levels rising to 8% in 2019, there is a speculation that the majority of savers will still not have enough money for retirement. This is why it’s important for the government to ensure that all areas of workforce can benefit from auto-enrolment, especially part-time employees, people with multiple jobs and those who are self-employed. Many suggest that the government should set out clear plans to increase contributions after 2019 and to explore how to best engage all workers with savings and planning for their retirement.

Also, although a number of employees build up their pensions, some of these pensions are acquired from different providers. Therefore, it may be more difficult for them to track their multiple pension savings. As a result, the government is now currently working on the development of the Pensions Dashboard wherein it enables employees with different pension providers to get an overview of all their pension savings online.