The number of under 30s saving enough for retirement has risen sharply by 9%, according to the
14th annual Scottish Widows Retirement Report.
As the success of auto-enrolment continues, two in five UK workers (39%) aged 22-29 years old* are
now saving adequately for retirement, up from 30% last year. Despite this, more than one in five
young people (21%) are still saving nothing for later life, with a further 20% saving seriously less than
12% of their income, the minimum amount recommended by Scottish Widows.**
Hardworking ‘multi-jobbers’ missing out
The research also shows that nearly two million ‘multi-jobbers’ – people with more than one job – are missing out on over £90 million a year in employer contributions because of the policy on autoenrolment thresholds. Multi-jobbers, who are often working full-time hours, are unfairly missing out on pension contributions for their overall earnings due to their income being split across different employers, thus falling foul of minimum earnings threshold for enrolment.
Scottish Widows projections, using the latest ONS figures, show that 1,831,127multi-jobbers have at least one job that earns under £10,000 and is not enrolled in the company’s pension scheme. Based on the average salary from these jobs, collectively over £90 million of employer contributions a year could be claimed if the auto-enrolment threshold was scrapped.
Robert Cochran, Retirement Expert at Scottish Widows, said: “It’s encouraging that more young
people are saving enough for a decent retirement and auto-enrolment has played a really important
part. However, auto-enrolment was designed as a safety net for a country facing a pensions crisis.
This year’s study shows some of the hardest working and most financially vulnerable members of
society are slipping through the auto-enrolment net because of minimum earnings thresholds. This
unfairly impacts multi-jobbers, who could be working the equivalent of full-time hours, yet without
the financial benefit of having a single employer.”
Adequate savings levels stagnate for fourth year
Meanwhile, savings levels have stagnated across the rest of the working population. At 55%, the
proportion of UK workers saving adequately for retirement has dropped slightly for the first time
since 2013, falling from 56%, the prevailing rate for the last few years.
Despite adequate savings rates having risen by 10% since auto-enrolment was introduced in 2012,
the stall in recent years demonstrates that a renewed effort is needed to improve the nation’s
readiness for retirement.
Robert Cochran continues:
“The fact that savings levels have stagnated for the last few years shows that auto-enrolment is not
a silver bullet. It will be interesting to see if the step up in minimum contributions helps reverse this
trend, but it doesn’t take away from the fact that the current threshold puts an unfair barrier in the
way of low-paid workers and their ability to prepare adequately for retirement.
“We want to see it scrapped entirely to let all workers benefit from employer contributions. It’s vital that every single
person in the UK is prepared for the rising costs of retirement, and removing the threshold can help to do that.
“This evidence underscores our continued campaign to make pensions more inclusive for low
earners. It’s a thorny issue but only by tackling it will the lowest paid segments of the workforce
have a fair chance of kick-starting their later life savings with support from their employers.”
Source – https://adviser.scottishwidows.co.uk/assets/literature/docs/2018-06-retirement-report.pdf
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