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Maintaining the momentum on auto-enrolment

CII Thinkpiece no.121

Should the Government exploit the success of auto-enrolment by increasing savings amounts or extending it to include life and protection insurance? Nick Hurman FCII Chartered Insurer explores the issues.

The Government's policy of auto-enrolment has brought nearly 6 million new members into pension schemes. This has been a revolution in that it has brought about a striking reversal in the previous long-term decline in long-term savings.

Albeit a slow revolution though: when auto-enrolment finally 'stages' to all employees in 2018, it will have taken 13 years since the Turner Commission first recommended the strategy in 2005.

Whilst there are key challenges to overcome in the next couple of years, the government and industry should exploit and build upon a clear momentum behind the policy that clearly exists.

Two key issues still need to be addressed. The first is delivering the levels of income in retirement that people on average appear to want, through initiatives such as auto-escalation.

The second issue is protecting savers' finances whilst they are building their assets for retirement. For example, while addressing the savings gap, it does not address the immediate needs of younger savers such as income protection or life assurance.

The inclusion of auto-escalation of pension contributions and integrated life cover into the auto-enrolment apparatus are practical steps to take to address these

A review of auto-enrolment should be conducted now to gain consensus to building in these features once the current implantation is completed in 2018.

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CII Thinkpiece: Homemade pensions: what do the pension freedoms mean for property equity? (Mar 2015) »

CII report: Auto-enrolment and small businesses (Jan 2014) »

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