Workplace saving reforms 'could double private pension incomes by 2070'

The Government's automatic enrolment scheme could help workers to almost double their pension incomes, it is believed.

Under the plans, due to be rolled out from October, up to nine million people will be automatically enrolled into workplace pension schemes.

According to a report by the Department for Work and Pensions, the scheme will see median average private pensions rise to between 153 and 195 a week by 2070.

The report found that without the reforms, private pension incomes would only reach between 86 and 106 by this period.

Britain is facing a pension savings crisis, with private sector pension participation falling from 7.9 million people (55%) in 2003 to 5.8 million (42%) in 2011.

The document, entitled Workplace Pension Reforms: Baseline Evaluation Report, looks at how pension income levels will change as a result of auto-enrolment.

Commenting on the findings, TUC general secretary Brendan Barber said auto-enrolment would help to address Britain's growing old age poverty crisis, with more people saving into pension schemes earlier in their career.

He added: "With two-thirds of employees not saving into an employer-backed pension scheme, auto-enrolment into workplace pensions cannot come soon enough."

Ros Altmann, director-general of Saga, acknowledged that auto-enrolment would go some way towards solving the pension crisis but warned that more must be done to encourage people to plan for their retirement.

Including ISAs in workplace savings and giving employees partial access to pension funds would help to create "a more active savings culture", she added.

Dr Altmann said: "In uncertain financial times it is not surprising that people are unhappy to put their money in a 'locked box'."

She went on: "We also need to move away from the traditional model of retirement where people work until age 60 or 65 and are at this point expected to have saved all they will need for retirement.

"Most people at 65 will still be active and healthy with many years ahead of them to enjoy. By working, either full or part time, during some of these bonus years people can continue to save for their later life needs while also adding their valuable skills to the workforce."

Copyright Press Association 2012