A Cumbrian MP is backing plans to extend pensions auto-enrolment to everyone aged 18 and over and part-time workers.
Carlisle MP John Stevenson has announced his backing for a Private Members Bill by fellow Conservative MP Richard Holden, which would add £2.77 trillion to the pensions savings of British workers across the UK.
Mr Stevenson points to research that indicates that such a move could add £3.6 billion to the pension savings of Carlisle workers.
Auto-enrolment into pensions was introduced in 2012 by the Conservative-led Coalition Government and as a result, the amount of people saving towards a pension in addition to their state pension has increased from 46.5% to 77.6%.
However, auto-enrolment is currently limited to workers aged over 22 who earn over £10,000 a year. This excludes many part-time workers who earn below the threshold – or have multiple jobs – and also means that the half of young people who start work or an apprenticeship at 18 do not get the benefit of auto-enrolment for the first four years of employment.
What is an auto-enrolment pension?
Automatic enrolment is when an employee who meets certain requirements is made a member of a workplace pension scheme without asking for it.
The report by Onward highlights the benefits that extending auto-enrolment would bring to the pensions of millions of British workers:
- The changes would mean that UK workers pension pots would swell by £2.77 trillion. This would help provide long-term security for millions more pensioners, levelling-up their retirement as well as providing a steady stream of patient, long-term capital for investment across the UK.
- Currently, just 57.8% of part-time workers are contributing to a pension versus 86.4% of full-time workers. Women are far more likely than men to be in part-time work and to have multiple part-time jobs. This change would close the gap between men and women’s pension savings dramatically, helping millions more have healthier, happier and a more secure retirement.
- While part-time workers across the United Kingdom would benefit from these changes, constituencies outside London, would benefit most, with: Mansfield (Nottinghamshire), Workington (Cumbria), Hyndburn (Lancashire) as well large parts of the South West, the Midlands, and North of England set to benefit the most.
Examples of how low-paid workers would benefit could see a employee working part-time in two jobs, each paying £190 per week, have their pension pot triple over their lifetime to almost £300,000.
Also, a young person in work from 18 earning the living wage would see their pension pot increase by £25,000 for just a few pounds a week paid in over those four years due to the over 45 years of compound interest they would accrue.
Mr Stevenson said: “The extension of pension auto-enrolment to everyone aged 18+ and for part-time workers is estimated to increase total lifetime savings for workers across Carlisle by £3.6 billon. This long-term change would significantly improve the savings rates of thousands of my hard-working constituents and boost their pensions, especially part-time workers and women.
“That is why I am backing Richard Holden MP’s Bill – everyone in Carlisle deserves to have a secure and healthy retirement after a lifetime of work. These changes will help deliver that for the people I am so honoured to represent.”
Richard Holden, MP for North West Durham said: “Auto-enrolment has been one of the massive hidden triumphs of the last decade in the UK, but sadly millions of hard-working British people aren’t benefitting because they’re under 22 or simply not working enough hours. I want to change that.
“In 2017 the Government said that it would look at extending auto-enrolment by the mid-2020s but to hit those dates we need legislation now to make it happen and allow business time to phase in these important changes. That’s what my Bill will do.
“Nothing could show clearer intent towards long-term levelling up than ensuring that everyone who works hard will see a safer and more secure retirement.”
Will Tanner, Director of Onward UK said: “Extending auto-enrolment to everyone would achieve two of the Government’s key objectives in one fell swoop. It would massively boost the savings rates of some of the least well off in society and it would unlock billions in capital to be deployed towards levelling up and boosting growth.
“Even better, it is a simple, well-understood system that already exists, meaning reform would be uncontroversial and straightforward to achieve. The Government has already indicated it will look at this; it is time to make good on those promises.”
