UK. Auto-enrolment contribution rates need to rise to 12%, expert tells MPs
Auto-enrolment contributions need to rise to 12 per cent of earnings from the current 8 per cent, but this change should not be rushed through, MPs have been told.
Speaking to the work and pensions committee this morning (February 23), Nigel Peaple, director of policy and advocacy at the Pension and Lifetime Savings Association, said auto-enrolment pensions “work really well”, while the voluntary saving side simply “hasn’t come through”.
“We believe the answer is to increase the automatic enrolment contributions,” said Peaple. “You could go from the current 8 per cent of earnings, to about 12 per cent of all earnings over the next decade.”
Peaple was quick to caveat that “there’s no need to rush it”.
“Very importantly, given the cost of living crisis at the moment, it shouldn’t be rushed and ideally you might do it in two steps,” he said.
“The first step being you increase the employer contribution from 3 per cent to 5 per cent, which would match the employee contribution.
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