"While saving something is better than saving nothing, an 8% contribution is a long way from delivering fully-funded retirements."
It found that since auto-enrolment was introduced five years ago, the number of adequate savers in the UK has risen from 46% to 56%. However one in five adults (18%) are still not saving anything into a pension and 70% of under 30s are not saving adequately.
Changes would include increasing minimum contribution levels to 12% by 2020. Scottish Widows argues that while minimum pension contributions will rise from 2% to 8% in April 2019, "this is not enough to provide an adequate income in retirement for most".
Scottish Widows also believes that qualifying earnings should be "ditched" so that contributions paid on every pound earned, and that those earning under £10,000 should also benefit from auto-enrolment, even if they can't afford to contribute.
It is urging both the Government and industry "to explore how these people can still receive an employer contribution, while not discouraging others from making personal contributions".
Pete Glancy, Head of Policy Development at Scottish Widows, said: “There is no doubt auto-enrolment has been a success in kick-starting the savings habit for millions – but it is not a silver bullet. Auto-enrolment may well be lulling people into a false sense of security that they are putting away enough for a comfortable retirement. For many, particularly those only making the minimum contribution, that is simply not the case given retirement is looking more expensive, and longer, than ever. We want the Government to take the opportunity with the auto-enrolment review to make some rule changes to help people save more.”
Stephen Coates, Principal, JLT Benefit Solutions, said: “While saving something is better than saving nothing, an 8% contribution is a long way from delivering fully-funded retirements. The next challenge is to move the conversation from the policy-makers, scheme providers and the employers, to the policyholders themselves. They need to be actively involved in determining and reviewing their savings levels, monitoring charges and investment performance, as well as making the right choices at retirement. The first hike in contributions provides a great opportunity to further prompt savers to take greater responsibility towards their retirement.”
