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FCA: 15 million don't have a pension

The FCA has this morning highlighted the fact many millions in the UK still don’t have a pension, in spite of the recent progress made by the auto-enrolment programme.

Andrew Bailey spoke about this issue in a speech to the Investment Association last night. We’re expecting to see more on this in their ‘Financial Lives’ research published later today.

Tom McPhail, Head of policy at Hargreaves Lansdown:

‘Auto-enrolment has been an incredible success, helping over 8 million people so far to start building up savings for their retirement. However millions more have been left behind. Low earners, the young, part-time workers, the self-employed and people working past retirement age all risk missing out on the generous top-ups available. The sooner the benefits of this fantastic system can be extended to help more of the population, the better.’

‘Neither the government not the regulator has any kind of clear policy to encourage more saving and investing; it isn’t even part of the FCA’s statutory objectives. We’d like to see this challenge given greater priority by the government as it has profound implications both for individuals and for society more generally.’

‘If you’re not in a work-place pension and you are eligible to join one, then do so because you’ll get free money from your employer and the government. If you aren’t eligible then look at setting up your own pension; you can start saving from as little as £5 a week.’

Pension choices

If you want a simple no-frills pension to get you started, you can always join NEST, the government backed scheme set up to help employers with their auto-enrolment duties. If you want something that gives you more choice and control, then look at using a low-cost Self Invested Personal Pension (SIPP).

Latest auto-enrolment stats

According to the pension regulator, as at September 2017:

  • Total employers who have completed the auto-enrolment declaration of compliance is 807,810
  • Total workers of those employers is 27,364,000
  • 8,707,000 have been auto-enrolled
  • 10,555,000 were already active members of a qualifying scheme
  • 7,668,000 fitted into the ‘other’ workers category; in other words, they have been through auto-enrolment but still aren’t in a pension

There are around 4.8 million self-employed workers, none of whom have been auto-enrolled (for obvious reasons). The government has committed to finding ways to bring them into pension saving. In spite of the obvious appeal of using the tax or NI system for this purpose, we think it unlikely the government will do this; at the moment they seem more interested in using technology to solve this problem.