Chancellor Rachel Reeves plans to initiate a review of the auto-enrolment pension scheme next week. The review could lead employers to raise their contributions to staff retirement funds. Expected details will be part of Reeves' Mansion House speech outlining government financial strategy. Currently, contributions stand at 8%, with employees contributing 5% and employers 3%. Concerns about insufficient pension contributions to support retirees have prompted calls to raise the minimum to 12%, suggesting gradual adjustments. The review is set to launch before the summer recess on 22 July.
The review, led by the Department for Work and Pensions, will explore raising auto-enrolment contributions from the current level of 8% of worker earnings, with employees currently paying in 5% and the employer adding 3%.
Leading pension providers have long called for the figure to be raised to 12%, suggesting that the increase takes place gradually over a number of years.
There are growing concerns that the pension contributions are not high enough to support people through retirement, creating a ticking timebomb where retirees will have to turn to state support and care in their old age.
The auto-enrolment scheme, which was originally launched in 2012, forced employers to enrol employees automatically into a pension and contribute to their retirement funds.
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