Eight out of 10 young adults demand earlier pension saving

Earlier in March, a group of companies across the pensions industry, including Aviva, Scottish Widows and Legal & General Investment Management, co-signed a letter to chancellor of the exchequer Rishi Sunak calling for the expansion of auto-enrolment.

They lobbied for a reduction in the auto-enrolment starting age to 18. The group also called for Sunak to phase out the £6,240 lower earnings limit — the earnings threshold that allows employees to qualify for certain state benefits, including the basic state pension.

“We believe it is time to level up pensions for everyone,” the consortium told Sunak.

According to a survey from the Pensions Management Institute, which polled 1,000 employees aged between 18 and 22, 82 per cent of young people in work believe pension saving should start before age 22.

Meanwhile, 61 per cent of those surveyed think that an individual’s entire salary should be counted when calculating pension contributions, instead of merely earnings that sit above the lower threshold.

Fifty-nine per cent said that the statutory minimum contribution rate of 8 per cent was too low, and wanted a minimum rate of 12 per cent.

“The results of this research should kill off the lazy assumption that young people do not give serious consideration to preparing for their retirement,” said PMI president Lesley Alexander.

“It is emphatically clear that young people would be prepared to make a greater commitment to pension saving were they encouraged to do so.”

In January, Conservative MP Richard Holden introduced a private members’ bill to build out auto-enrolment to younger and low-paid workers. It has yet to receive its planned second reading.

In the same month, pensions minister Guy Opperman declined to offer a timetable on the scheme’s expansion. 

In February, Opperman confirmed that the auto-enrolment reform bill will not get through parliament in time for the Queen’s Speech in May.