When The Pensions Regulator recently published its seventh and final annual commentary and analysis report, there was, understandably, plenty of fanfare to accompany the announcement.
As one would expect, pensions minister Guy Opperman clearly relished the opportunity to laud the achievements of auto-enrolment, particularly the fact that 84 per cent of 22 to 29-year-olds are now saving, compared to 24 per cent in 2012.
He also made much of the fact that, for the first time, the same number of women as men are saving into a workplace pension. “The progress we’ve made towards eliminating the gender gap in pension saving is hugely encouraging,” he said.
He is right on both counts – the figures bear out the undeniable fact that auto-enrolment has proved to be a resounding success, so far.
But auto-enrolment remains a work in progress. It is not job done.
Perhaps the most disappointing aspect of the recent pension scheme bill announcement was the fact that none of the key recommendations made in the government’s auto-enrolment review of 2017 were included.
Lowering age eligibility for auto-enrolment to 18 – a move that would benefit the best part of 1m young workers– is absent.
It is great news that a growing number of people in their twenties are saving into a workplace pension thanks to the continued success of auto-enrolment. But if you are old enough to work in a job that pays the bills, then surely you are old enough to be given the option of whether you want to save for your future.
Also absent is any lowering of the minimum earnings from one job needed to be eligible for auto-enrolment.
It should be lowered from £10,000 from each job to the national insurance threshold, which is just over £8,600.
This is a sensible, pragmatic measure to bring more of the low paid – many of whom hold down more than one job – into pensions without extending the principle so far down the low income scale that pensions saving becomes counterproductive.
This approach would open up retirement savings to an army of nearly half a million lower paid workers, an estimated two-thirds of whom are women – important when considering the gender pensions gap.
Six months ago, The People’s Pension published a report – The Gender Pensions Gap: Tackling the Motherhood Penalty – which laid bare the shocking inequalities when it comes to the retirement savings of men and women.
The bottom line makes for stark reading: the average female pensioner is £7,000a year worse off than her male equivalent.
Despite claims to the contrary, there is still a long way to go before this gap is closed.
We know many women chose to reduce their hours or stop working because they understandably want to spend more time with their children. A key reason for some was that it did not make financial sense to keep working and pay for childcare, or they simply could not afford to.