Automatic enrolment set to double private pension income
Automatic enrolment (often referred to as auto-enrolment) could almost double private pension income (also referred to as personal pension income) by the time people now starting work reach their retirement, according to the department for work and pensions (DWP).
DWP modelling shows that with automatic enrolment median private pension income could rise to between £153 and £195 a week by 2070. Without these reforms, median weekly private pension income would only reach between £86 and £106.
Key findings of DWP’s research include:
- Private sector pension participation has fallen from 7.9 million (55 per cent) in 2003 to 5.8 million (42 per cent) in 2011;
- Private sector workplace pension saving has fallen from £39.3 billion in 2007 to £35 billion in 2011.
Pensions Minister Steve Webb said:
“This October we will introduce the most important changes in pensions for a century to help people save and avert a pensions crisis in the future.”
“We are living longer yet 11 million of us are not saving enough for retirement.”
“Automatic enrolment will reverse this trend as millions will have a workplace pension and could double their private pension income, on top of a reformed state pension.”
For more information and expert advice on auto-enrolment, contact Farrell Financial Planning today.
Farrell Financial Planning are independent financial advisers (IFAs) and offer whole of market independent financial advice to both businesses and individuals.
Research taken from “Workplace Pension Reforms: Baseline Evaluation Report.