"Once again the annual workplace pension figures published today are encouraging to say the least. The number of eligible employees participating in a workplace pension in 2018 has continued its upward trend and is now up 3% from last year.
"There can be no doubt in anyone’s mind that this success is largely down to auto-enrolment. A positive point to make is that persistency levels - the amount of employees who have saved into a pension in at least three of the last four years - have only dropped a couple of points. It means around £7bn more is being saved in 2018 compared 2017, now totalling £90.4bn annually. There have been fears that as auto enrolment matures drop-out rates may rise but that doesn’t appear to be the case. However, it is important to note that these figures don’t show any impact that contribution rate increases in April this year may have had. It is crucial that savers keep contributing and resist the temptation to opt out when they see a larger chunk of their pay directed into the their pension.
"Another marker of AE’s success is that the largest increase in participation was in the 22 to 29 age bracket where 90 per cent of eligible employees were participating in a workplace pension in 2018, which is a huge rise of nearly 11 percentage points since 2012. As we know saving early is a crucial ingredient in building up a healthy retirement pot. This kind of success underlines the need for continuity and stability for pensions policy and throws serious doubt over ideas that young people should be able to use their pension pot to fund their first property purchase, as suggested in a recent speech by Communities secretary James Brokenshire’s speech.
"While Brokenshire is right to think of different ways to try and tackle Britain’s housing crisis it would be ludicrous to think that enabling people to raid their pension pots early on in life represented a good solution. Allowing a policy like this to be enacted would allow for short term gain but ultimately cause a huge degree of long term pain. Even with auto-enrolment dramatically helping to increase the number of people saving into a pension, the actual amount people are saving is still small, especially for younger workers with lower salaries. If you were able to empty your pot to buy a house, people may end up being required to work well into their late seventies.
"The figures are clear; AE is working well for typical workers at the moment. While there is still more to be done to make sure other types of workers like the self-employed also are building up retirement provision, we should not mess around with something that is making a tangible difference to the retirement prospects of a huge percentage of the nation"