1. ITV Report

Automatic pension saving to be extended to 18-year-olds under new government plans

It is estimated the changes outlined in the review will deliver an additional £3.8 billion of pension contributions. Credit: PA

Automatic pension saving could begin at 18 under new government plans.

Some 900,000 young people will begin saving into a workplace pension unless they opt out under recommendations to lower the qualifying age of auto-enrolment, under the recommendations.

Plans set to be published by the Department for Work and Pensions (DWP) aim to get young people saving earlier for their retirement.

Currently, automatic enrolment applies to workers aged between 22 and state pension age, and earning above £10,000. Under the new reforms, which will now be progressed and legislated for, contributions will be calculated from the first pound earned.

But some experts argue the pace of the new reforms is "shockingly lethargic" and risks leaving a generation behind.

David Gauke, Secretary of State for Work and Pensions said: "We are committed to enabling more people to save while they are working, so that they can enjoy greater financial security when they retire.

"We know the world of work is changing, so it is only right that pension saving does too. This ambitious package will see more people than ever before helped onto the path towards building a secure retirement."

The roll out of auto enrolment started in 2012, with more than nine million people now a with a workplace pension.

The review, due to be published on Monday, estimates there are still about 12 million people under-saving for their retirement, representing 38% of the working age population.

Of this 12 million, six million are deemed "mild under-savers".

It is estimated the changes outlined in the review will deliver an additional £3.8 billion of pension contributions, taking the total to £24 billion per year.

The government plans to work towards introducing the reforms in the mid-2020s in partnership with employers and the pensions industry.

Nathan Long, senior pension analyst at Hargreaves Lansdown, said: "Starting from age 18 instead of waiting until 22 and allowing contributions to apply from the first pound earned will transform people's retirement prospects.

"Not only does this mean retiring with more income, it means having greater control over leaving work.

"These measures mean someone with average earnings could increase their pension pot at retirement by over £60,000."

A former pensions minister welcomed the planned reforms but said the proposed pace of change should be faster.

Sir Steve Webb, director of policy at Royal London, said: "There are some great ideas in this review, including starting pension saving at age 18 and making sure that every pound that you earn is pensionable.

"But the proposed pace of change is shockingly lethargic.

"Talking about having reforms in place by the mid-2020s risks leaving a whole generation of workers behind."