Posted on July 28th, 2016 | Categories - News
New figures have shown that more than six million employees have now been automatically enrolled into workplace pensions. Furthermore, in boost to the scheme, 95% of employers are complying with the new rules.
But despite this, there are still concerns that workers are not paying enough into their pensions.
Automatic Enrolment is being phased in with smaller employers now needing to comply with the rules. It is widely thought that these micro employers, including those people, who, for example, employ a part-time gardener or nanny, will find it hardest to comply with the rules.
Commenting on the latest figures, Charles Counsell, of the Pensions Regulator, said: “The compliance rates achieved have been consistently at the top of our expectations and the savings landscape has been transformed. But we know the job is not yet done and there are still significant challenges ahead.”
Despite the apparently successful rollout of Automatic Enrolment, many pension experts are concerned that the amounts being paid in are too low to provide a comfortable income in retirement.
Figures from the Pensions Regulator show that the average contribution from workers is just 3% of their salary. Over the course of the next three years’ contribution levels will rise to 8% of ‘qualifying earnings’, which are defined as your earnings between £5,824 and £43,000 including: salary, commission, bonuses and overtime.
Commenting on the low levels of contribution, former Pensions Minister, Steve Webb, said: “The fact that the average employer contribution rate among firms so far is just 3% shows the mountain that we have to climb.”
He continued: “Getting the combined rate of contributions from employers and employees to realistic levels as quickly as possible should be the central focus of the 2017 review of Automatic Enrolment. Without this, millions of workers in generations to come will simply be unable to afford to retire.”