08 August 2023

The Pensions And Lifetime Savings Association (PLSA) has released the new report ‘Uncovering the profile of low earners in the UK and the potential for pension saving through automatic enrolment. The study suggests that there is potential for almost 3 million low earners currently excluded from the UK workplace pension savings system, to be safely automatically enrolled in a workplace pension.

PLSA commissioned the Pensions Policy Institute (PPI) to examine the profiles of employees earning less than £10,000 – the threshold above which employees currently need to earn to be enrolled into their employer’s workplace pension scheme. Investigating whether automatic-enrolment (AE) could provide a way of improving retirement outcomes. The research reveals the profiles of low earners who earn less than £10,000 and explores the potential merits of integrating this population into pension saving through the mechanism of AE. PLSA states that all factors need to be considered in the design of policies aimed at improving retirement outcomes.

Below are some of the key findings from the study:

  • the research indicates that eliminating the AE trigger for individuals earning less than £10,000 has the potential to improve retirement outcomes by 7 to 13% for nearly 3 million people
  • before the policy can be recommended, further consideration must be given to the group of lower earners at risk of over-saving to ensure they can afford to save more.

PLSA has stated that further research on low earners, the needs of under-pensioned workers generally, and crossover of different characteristics is needed before a final decision could be made on whether to amend the current £10,000 earnings threshold.

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