The Department for Work and Pensions (DWP) is supporting proposals to expand automatic pension enrolment to under 22s and low earners

A private members bill from MP Jonathan Gullis called for two extensions to automatic enrolment, abolishing the lower earnings limit for contributions and reducing the age for automatic enrolment from 22 to 18 years old.

The lower earnings limit would also be removed, meaning those with low earnings would start paying into their pension as soon as they start earning.

Under the current rules, employers have to pay pensions contributions once an employee has earned over £6,240 and up to £50,270 in a financial year. Anyone who does not want to join a pension scheme can opt out.

There are no details about when the automatic enrolment changes are likely to be introduced.

Jonathan Gullis, MP for Stoke-on-Trent, said: ‘Auto-enrolment of pensions will benefit scores of young people in all four corners of the country, which is why I am delighted that Laura Trott [minister] is supportive of the bill.

‘With all the evidence of the huge positive impact it can have, it is a no-brainer that we now need to extend auto-enrolment to those aged 18 and above.’

The proposals come following DWP research, which showed that 12.5 million people were not saving enough for retirement.

Laura Trott, minister for pensions, said: ‘We know that these widely supported measures will make a meaningful difference to people’s pension saving over the years ahead.

‘Doing this will see the government deliver on our commitment to help grow the economy and support the hard-working people of this country, particularly groups such as women, young people and lower earners who have historically found it harder to save for retirement.’

The expansion of automatic enrolment was proposed back in 2017 in a government review, but no action had been taken since then to implement those proposals.

Employees across the UK saved £114.6bn into their pensions under automatic enrolment, an increase of £32.9bn compared to 2012, when it was introduced.

The department will also continue its work by introducing products such as pensions dashboards, although this scheme was put on the backburner last week due to IT programming complexities. It is now unlikely to be launched before 2025. Pension providers were due to start uploading data to the system this September.

It is also offering mid-life MOTs to provide advice to people about how they can save for their retirement and also to encourage 50-plus year olds to return to the workplace.

Around 38% of working-aged adults (12.5m) are not putting enough money aside for their retirement.

The DWP noted that this figure was a ‘relatively large proportion’ of the UK, adding that the level of under-saving increased to 14.1m (43%) of people when the majority of an individual’s defined contribution (DC) pension is converted into an annuity.

Higher earners are more likely to be under saving relative to target replacement rates (TRR), with around 14% of those in the lowest earning band (less than £14,500) under saving compared to 55% in the top earnings band – more than £61,500 per year.

It also looked at the pensions and lifetime savings association’s (PLSA) moderate retirement living standard, which suggested a greater 51% of working people could be under-saving.

Retirees will also have to wait until they are 57 years old to claim their private pensions following a ruling that will the minimum pension age rise from 2028.

Currently, the minimum pension age is 55, although this will be increased to 57 years in 2028, meaning it will be significantly harder to retire early.

After 2028, the government plans to keep the minimum pension age around 10 years earlier than the state pension age. This would mean the minimum pension age could rise again to 58 by 2034.

The government plans to consult on a further extension of the state pension age, with indications it will pull back the start date for the 68 year retirement mark

The review will consider whether the rules around pensionable age are appropriate, based on the latest life expectancy data and other evidence, and will report back by May 2022.

State pension age is currently 66 and two further increases are currently set out in legislation: a rise to 67 for those born on or after April 1960; and a rise to 68 between 2044 and 2046 for those born on or after April 1977. However, it now looks increasingly likely that the start date for the increase to 68 years will be brought forward.

The first review of state pension age in 2017 concluded that the next review should consider whether the increase to age 68 should be brought forward to 2037-39, seven years earlier than originally planned. It is now increasingly likely that people will be expected to work longer

This review will consider a range of evidence, including the implications of the latest life expectancy data; and it will produce an assessment of the costs of an ageing population and future state pension expenditure.

Two independent reports have been commissioned – one from the government actuary’s department to look at life expectancy projections. The second is to be led by Baroness Neville-Rolfe, which will also consider what needs to be considered when setting the state pension age.

The government is also reviewing the current age limit for pension drawdown from private pensions and is likely to raise the age to 57 years from the current 55-year limit, meaning that there will be later access to pension pots.