In response to the Work and Pensions committees report, 'Protecting pension savers – five years on from the pension freedoms: Saving for later life', the provider is calling on the government to remove the £10,000 earnings barrier which prevents low earners from being automatically enrolled.
Now Pensions said this move could see an additional 2.8mn people saving into workplace pensions.
The provider also wants to see the minimum age lowered from 22 to 18 and the qualifying earnings threshold removed so people can start saving from the first pound of earnings, as proposed by the government's 2017 auto-enrolment review.
It is time that the government took action to ensure that everyone in the UK has a fair opportunity to save via a workplace pension.Patrick Luthi, chief executive officer of Now PensionsThe provider said this would increase pension wealth for these groups by an average of 30 per cent - though for some groups, such as single mothers, it would increase by 152 per cent.
If these policies were introduced, they would generate an additional £1.2bn in annual pension contributions, it said.
The government has already committed to extending auto-enrolment to low-income and younger workers by the mid-2020s but Now Pensions wants to see a concrete timeline.
This was after last week (January 26), pensions minister Guy Opperman failed to set out a timeline for reforming auto-enrolment in a parliamentary debate on the policy.
Patrick Luthi, chief executive officer of Now Pensions, said: “As we reflect on the past 10 years of auto enrolment and the huge success it has played in getting over 20mn people in the UK saving for their later life, it is now time that the government took action to ensure that everyone in the UK has a fair opportunity to save via a workplace pension.
“The benefits of saving via a workplace pension are clear as the member benefits from contributions from their employer as well as possible tax relief from the government. As we look ahead to the next 10 years, now is the time to fix these obvious and detrimental inequalities.”
Last month, Conservative MP Richard Holden tabled a motion in the House of Commons to expand auto-enrolment in line both with the DWP’s recommendations and those made by think tank Onward, which proposed a phased approach to the changes.
Under his proposals, the earnings trigger and age limit would be abolished in 2023, but the qualifying earnings limit would be reduced gradually and not be entirely removed until 2026.
Tackling savings gap
Now Pensions also recommended more should be done to improve people’s financial literacy and education, especially at an earlier age to help improve engagement.
In addition, the pension provider, which manages £3bn of UK pension savings, has been campaigning to highlight the repercussions unequal pay may have on certain groups in the UK and their ability to save.
Now Pensions' research into underpensioned groups with the Pensions Policy Institute found that some groups - including women, single mothers, people with disabilities, carers, ethnic minorities, the self-employed and multiple jobholders - were reaching retirement age with just 15 per cent of the pension wealth of the UK average.
The firm has been lobbying the government and campaigning for policy change following the requirement for UK businesses with 250 plus employees to report their gender pay gap in 2017.
It said their policy proposals would help to get a further 3mn people saving for their retirement via automatic enrolment, generating over £1bn in annual pension contributions.
Joanne Segars, chairwoman of Now Pensions' board of trustees, said: “We have long been campaigning to raise awareness of the huge savings gaps that we see in the UK today.
“The state pension alone is unlikely to provide enough for the standard of living most people expect in retirement, which is why auto-enrolment has been so important in allowing the population to meet their retirement expectations. We congratulate the WSPC on issuing this inquiry and we hope the government takes the steps necessary to ensure that these inequalities are addressed and given the attention they deserve.”
sonia.rach@ft.com
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