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Auto-Enrolment Contributions: Beware the Quick Fix - Evidence Based Decision Making Needed

Research being published tomorrow by the Pension and Lifetime Saving Association (PLSA) highlights two crucial needs for the future of pension auto-enrolment:

  • Contribution rates should ultimately rise to 12%
  • No decisions should be made as to when and how quickly the contributions are escalated until 2019.

Contribution rates are currently at 2%. They will increase to 5% in April 2018 and then to 8% in April 2019.


Nathan Long - Senior Pension Analyst at Hargreaves Lansdown:

"Pension contribution rates under auto-enrolment must rise. A contribution level of 12% of salary, saved over an entire working life should put most people in a pretty good place when retirement beckons.

Contributions are currently at the entry level with increases already being phased in up to April 2019.

The behaviour of pension savers after the full contribution levels have been phased in will be crucial to the future direction of legislation. No rise in opt-out rates would likely see a swift march towards contributions of 12. Soaring opt-out rates could see a move to compulsory pension saving, a slower rise in contribution levels or a greater proportion of any increase being shouldered by employers.

A quick fix decision made ahead of these outcomes would be extremely reckless. Rational, evidence based decision making is what is called for here, not finger in the air guestimates."


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Hargreaves Lansdown is equipped with a live in-house broadcast camera via the Globelynx network and has an ISDN line available for radio interviews - 0117 934 9006. To arrange an interview with a Hargreaves Lansdown spokesperson please contact the person you wish to speak to directly using the contact details above, or call Globelynx on 0207 963 7060 or email globelynx@globelynx.com.