Marking 10 years since the dawn of automatic enrolment, the Association of British Insurers (ABI) is calling on the Government to set out how pension contributions can be increased and the eligibility criteria widened to encourage people to save more over the next 10 years.
In its latest report, ‘Automatic Enrolment: What Will The Next Decade Bring?’ the ABI examines the success of the policy, identifies the challenges that remain and sets out the key steps to drive up pension engagement and adequate savings. It highlights that automatic enrolment has been an enormous success and has achieved its target of increasing participation by bringing over 10 million more people into workplace pension schemes.
However, despite the huge increase in the number of pension savers, people still aren’t saving enough for retirement. To address this gap, the ABI recommends gradually increasing the minimum contribution rates from 8% to 12% over the next 10 years, with the new minimum contribution split evenly between employers and employees. The report suggests a timeline, with changes starting to be introduced after 2025.
With the cost of living in mind, the ABI recommends that savers should have flexibility, including allowing them to ‘opt-down’ to 10%. Alternatively, a minimum contribution could be set at 10% with the option to ‘opt-up’ to 12%. Further research is needed to determine which is more affordable for both employers and savers, and these studies should inform the Government’s plan.
The ABI also urges the Government to bring forward the commitments it has already made to extending automatic enrolment, by lowering the age threshold from 22 to 18, and reducing the earnings threshold so that contributions are made from the first pound earned. These were slated for the mid-2020s and need to be legislated for as a matter of urgency. 
Hannah Gurga, Director General at the ABI said:“Automatic enrolment has transformed workplace pension savings in this country. But the challenge remains to ensure people are saving enough for their retirement. For the next 10 years, we need a detailed plan for getting to higher contributions. Our report published today sets out the industry’s thoughts on how to achieve this – we stand ready to work with the Government to ensure the next decade of automatic enrolment builds on the proud record of its first ten years.” 
Dr Yvonne Braun, Director of Policy, Long Term Savings and Protection, at the ABI said:
“The huge success of automatic enrolment reflects a long-term plan based on consensus between political parties, industry and employers. We need the same approach now to determine the future of the policy, ensuring more people are included and are saving enough, with the right level of flexibility. Our report describes the key steps for the next chapter of automatic enrolment and sets out specific recommendations to adapt and evolve the policy.
“We also need to see more people engaging with their pension savings, which is why the industry has come together to launch the Pensions Engagement Season. By paying more attention to their pension, people will be able to understand if they’re saving enough and what actions they might need to take if they’re not.”
Notes to editors:
Automatic enrolment requires all employers to automatically enrol employees who are over the age of 22 and earn at least £10,000 a year into a workplace pension scheme.
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