Under 30s see leap in retirement savings; govt urged to scrap AE threshold

The number of under 30s saving enough for retirement has risen sharply by 9%, according to the 14th annual Scottish Widows Retirement Report, despite more than one in five young people still saving nothing for later life.

Two in five UK workers (39%) aged 22-29 years old are now saving adequately for retirement, up from 30% last year.

Scottish Widows however has called for the auto-enrolment threshold to be scrapped to help more people save for later life.

The research shows that nearly two million ‘multi-jobbers’ – people with more than one job – are missing out on over £90m a year in employer contributions because of the policy on auto-enrolment thresholds. Multi-jobbers, who are often working full-time hours, are unfairly missing out on pension contributions for their overall earnings due to their income being split across different employers, thus falling foul of minimum earnings threshold for enrolment.

Scottish Widows projections, using the latest ONS figures, show that 1,831,127 multi-jobbers have at least one job that earns under £10,000 and is not enrolled in the company’s pension scheme. Based on the average salary from these jobs, collectively over £90m of employer contributions a year could be claimed if the auto-enrolment threshold was scrapped.

Scottish Widows retirement expert Robert Cochran, said: “It’s encouraging that more young people are saving enough for a decent retirement and auto-enrolment has played a really important part. However, auto-enrolment was designed as a safety net for a country facing a pensions crisis.

"This year’s study shows some of the hardest working and most financially vulnerable members of society are slipping through the auto-enrolment net because of minimum earnings thresholds. This unfairly impacts multi-jobbers, who could be working the equivalent of full-time hours, yet without the financial benefit of having a single employer.”

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