There have been calls to introduce more flexibility into the auto-enrolment regime in the light of potential economic volatility. Helen Morrissey does not agree.
The last 12 months has undoubtedly been challenging and it will take some time for the full economic effects to play out. There are concerns that increasing auto-enrolment (AE) contributions at a time of potential financial hardship could lead to more people opting out.
In this issue of Professional Pensions we have an article debating whether members should be allowed to 'opt-down' - that is, stay in the scheme but not pay the increased contribution. I can see the sense in such an argument - AE has been a real success up until this point and we don't want it to be derailed by a surge in people leaving schemes.
However, I think we need to plough on with AE contribution increases. We need to get the message through that saving for retirement is a vital part of retirement planning and I don't think putting off increases sends this message.
Times may be tough now but the savers will come across several such times during their working lives –this is part of life and if at all possible we must continue to save.
In the depths of the financial crisis there were several calls for the roll out of AE to be delayed. People argued that employees would not possibly stay enrolled in a pension during such difficult times. Guess what, they did!
The fact remains that while we have got off to a good start with AE it is just a start. We have a long way to go before savings levels reach anywhere near where they need to be.
Times may be tough now but the savers will come across several such times during their working lives - this is part of life and if at all possible we must continue to save. This is the only way to help people build sustainable retirement pots.
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