Commenting on the Department for Work and Pensions (DWP) Automatic enrolment review 2017, Linda Ellett, Partner at KPMG and member of the auto-enrolment advisory board, said:
"We want people to have a better retirement and the only way to make that happen is to make saving hassle free. Applying pension contributions to every pound earned removes confusion over how much they are putting aside, 8% is 8%. We need to make savings simple.
“We’ve also extended auto-enrolment to younger people. The KPMG/Tisa UK savings index found that, if you exclude property, 16-34 year olds have on average just £1,000 to their names. This has to change. Making pension saving automatic from when most people enter the workforce will help shift our culture from one that spends everything today towards a culture of saving. Even if people only save a little via auto enrolment, it is encouraging a positive savings habit as soon as people start earning.
“The committee has not made these decisions lightly, we understand that as real incomes fall and the economy remains challenged, the additional costs this incurs for both employers and employees might be keenly felt. However, as a nation we cannot continue to see pension savings decline and consumer debt rise. We have to take bold decisions now to make sure the next generation can be more confident of the retirement they want and deserve.”
David Fairs, Pensions Partner, KPMG UK, added:
“The £10,000 threshold for ‘automatic’ enrolment needs to be reduced in order to further benefit women, the disabled and those with multiple jobs. Automatic enrolment has been a success because it capitalises on inertia, whilst it is understandable that the Government didn’t want to impose further costs on employers at this time, it is only right that this is changed over time to help more people save meaningful amounts for retirement.
“The self-employed is a diverse group and it is likely that no single solution will work effectively for them all. Therefore, the decision to explore and trial different alternatives is a sensible approach.”
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