The government is hoping that auto-enrolment will invigorate retirement saving and help ease the massive UK pension deficit, which not so long ago was deemed the worst in Europe. Time will tell if this is a success and to celebrate now would be a mistake.
Numerous issues have enveloped the pension world in the past year, despite the positive stigma attached to auto-enrolment. There is understandably concern that small and medium-sized employers will not be able to cope with the administrative burden of the new regulations and, as the Australians will remind us, the minimum contributions for now are nowhere near significant enough to maintain a decent standard of living.
And then there is talk of a capacity crunch and a general disinterest from some providers to roll out enough pension policies to satisfy the anticipated wave of newcomers. Pension providers have been dealt the big task of educating and introducing user-friendly systems, and it is key that they rise to this challenge.
Longevity is also a popular topic of late. With life expectancy increasing considerably, and annuities still at rock bottom, plenty of money needs to be pumped into pension funds to ensure they suffice in later years. In this case it will be interesting to see how opt-out figures fare when the minimum contribution threshold increases.
There is no doubt that we are on the right path. Only now we must all unite – advisers, providers, the government and employers – to patiently educate the population and provide the relevant services to curb future fears of poverty-stricken retirements.
Daniel Liberto is features writer for Financial Adviser
This special report is produced in association with Scottish Widows. The editorial is independent.