More low-income workers are now putting enough away in savings for their retirement than in 2012 – a vindication of the government’s auto-enrolment plan to defuse the looming pensions crisis. According to research by Scottish Widows, half of workers earning between £10,000 and £30,000 a year are “saving adequately”, compared with a third when the scheme was first launched two years ago.
Employers have been required by law to automatically enter staff into pension schemes to address the need to start preparing for the costs of old age. Under the legislation, at the end of the six year period ending April 2017, every existing employer will have to enrol eligible staff into an occupational pension scheme and contribute towards it. According to Scottish Widows’ annual Workplace Pensions Report, the legislation has had a dramatic impact. For employees aged between 30 and 49, the number of people saving adequately has risen to 49 per cent, from 7 per cent last year. Overall, 53 per cent of people are saving adequately for retirement, up from 45 per cent last year. Lynn Graves, the head of business development at Scottish Widows, said: “This year’s results are extremely encouraging. The reform is more widely understood and welcomed as it rolls out to a wider cohort of employees.”
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