IFS: Automatic enrolment - too successful a nudge to boost pension saving?
Monday, 18 May 2020 10:48
Automatic enrolment has been hugely successful, such that over 90%
of eligible private sector workers are now members of workplace
pension schemes. Given they started furthest behind in terms of
pension provision, it is not surprising that the biggest increases
in coverage were for the young, the low-paid and the financially
insecure. What is more surprising, and perhaps worrying, is that
there is now no difference in participation rates at all across
groups with different levels of...Request free trial
Automatic enrolment has been hugely successful, such that over 90%
of eligible private sector workers are now members of workplace
pension schemes. Given they started furthest behind in terms of
pension provision, it is not surprising that the biggest increases
in coverage were for the young, the low-paid and the financially
insecure.
What is more surprising, and perhaps worrying, is that there is now
no difference in participation rates at all across groups with
different levels of financial security. Even among the least
financially-secure 3% of eligible private sector employees – those
with little or no savings, who are unable to afford necessities,
are on very low incomes and have poor health – participation rates
are above 90%. Given their current financial difficulties, it is
not obvious that most in this group should be reducing their
current gross earnings, even by 3%, in order to save for a
pension.
You can read the full briefing by Rowena Crawford and Pascale
Bourquin on the IFS website: https://www.ifs.org.uk/publications/14850
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