Pension exclusion ‘sees under-22s miss out on £18,000’
21st January 2020
Employees under the age of 22 could be missing on up to £18,000 as a result of being excluded from auto-enrolment, a report has claimed.
The Department for Work and Pensions (DWP) conducted a review into the Government's workplace pensions scheme back in 2017.
One of its recommendations was to lower the age at which full-time workers become eligible for auto-enrolment.
Workers currently need to be aged between 22 and their state pension age, and earning more than £10,000 a year to qualify.
More than two years have passed since the DWP delivered its verdict, and the age threshold is not expected to be lowered until the mid-2020s.
Royal London said that an 18-year-old earning more than £10,000 a year from full-time work since 2019 could miss out on workplace pension contributions of up to £18,000 before they turn 22.
That considers lost employer contributions for four years, lost tax relief on those contributions and the loss of investment growth.
Steve Webb, former director of policy at Royal London, said:
"Enrolling people into a [workplace] pension as soon as they start work makes sense.
"It reinforces the message that saving in a pension is the norm when you have a job, and that you should start saving as soon as you can.
"Even employers prefer to have a single system for all of their workforce rather than a complex set of exemptions and rules.
"It is time that Treasury and DWP sat down together and agreed a timetable to implement this overdue change."
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