Shropshire MP backing bid to get 18 to 22 year olds to automatically save for their pensions

It would mean young people and part time workers having their pay docked for pensions under a scheme where employees have an option to opt out.

Ludlow MP Philip Dunne says research shows it would add £2.8 billion to the pensions savings of workers across South Shropshire.

Mr Dunne is backing a Private Members Bill by fellow Conservative MP Richard Holden, which would add £2.77 Trillion to the pensions savings of British workers across the UK.

Auto-enrolment into pensions was introduced in 2012 by the Conservative-led coalition government, and as a result the amount of people saving towards a pension in addition to their state pension has increased from 46.5 per cent to 77.6 per cent.

But auto-enrolment is currently limited to workers aged over 22 who earn over £10,000 a year.

This excludes many part-time workers who earn below the threshold – or have multiple jobs.

It also means that the half of young people who start work or an apprenticeship at 18 are denied the opportunity to auto-enrol for the first four years of employment.

Under the proposals, someone currently working part-time in two jobs, each paying £190/week, would see their pension pot triple over their lifetime to almost £300,000.

Under another example, a young person in work from 18, earning the living wage, would see their pension pot increase by £25,000 for just a few pounds a week paid in over those four years, due to the over 45 years of compound interest they would accrue.

Mr Dunne said: “The extension of pension auto-enrolment to everyone aged 18+ and for part-time workers is estimated to increase total lifetime savings for workers across South Shropshire by £2.8 billion.

"By investing even a small amount into your pension, compound interest over the years will see it grow to a meaningful sum to help with the cost of living after retirement.

"This long-term change would significantly improve the savings rates of thousands of hard-working constituents and boost their pensions, especially part-time workers and women.

"I am backing Richard Holden MP’s Bill, which will help everyone in South Shropshire to have a secure and healthy retirement after a lifetime of work.”

Mr Holden, MP for North West Durham said: “Auto-enrolment has been one of the massive hidden triumphs of the last decade in the UK, but sadly millions of hard-working British people aren’t benefitting because they’re under 22 or simply not working enough hours. I want to change that.

“In 2017 the Government said that it would look at extending auto-enrolment by the mid-2020s but to hit those dates we need legislation now to make it happen and allow business time to phase in these important changes. That’s what my Bill will do.

“Nothing could show clearer intent towards long-term levelling up than ensuring that everyone who works hard will see a safer and more secure retirement. I am delighted to have the support of Philip Dunne and hope that the Government backs our campaign for action now.”