Policy experts are calling for pension auto enrolment rules to be expanded, as legislation already in place to widen the current system has yet to take effect. The think tank Standard Life Centre for the Future of Retirement is urging a further 4% change to the rules, which require employers to automatically enrol workers into a workplace pension scheme with a minimum contribution.
Centre director Catherine Foot said: "Automatic enrolment has transformed pension saving, helping millions more people build up money for retirement. But too many people are still missing out, while others aren't saving enough to enjoy the retirement they hope for."
Current rules and proposed changes
Under existing rules, workers aged between 22 and state pension age, earning £10,000 a year or more, are auto enrolled. The state pension age is rising from 66 to 67 in stages between April 2026 and April 2028. Contributions are only paid on earnings above £6,240 a year, and the minimum contribution is 8% of salary, typically made up of 5% from the employee and 3% from the employer.
Legislation approved in 2023 would extend auto enrolment to workers from age 18 and scrap the £6,240 earnings limit, so contributions would be calculated from the first £1 of income for those earning above £10,000. However, these changes have not yet been implemented.
Expert calls for further expansion
Ms Foot said bringing younger workers into the system could significantly boost their retirement prospects. She said: "Extending automatic enrolment from the age of 18 and ensuring pension contributions are calculated from the first £1 of earnings could make a real difference, particularly for those on lower incomes or starting out in their careers. The earlier people start saving, the more time they have to build their pension."
She also called for changes to increase the amount people pay in, adding: "It's not just about getting people into the system. We also need to help them understand the value of saving and that remaining at minimum contribution levels may not deliver the retirement they expect."
Pensions commission review
The ongoing pensions commission, tasked by the Government to independently review the adequacy and sustainability of UK pension savings, is considering factors including the state pension and private pension contribution levels. An interim report found that auto enrolment increased workplace pension saving but "not enough" for low and middle income earners, noting that contributions "vary significantly" and the 8% minimum "has become more of a norm than a minimum".
The commission is expected to present its final report and recommendations to the Government in February 2027.
