Accounts and Amounts: Reforming Private Pension Enrolment

The government has recently legislated radical private pension reforms that will lead to the majority of employees being covered by provisions for ‘automatic enrolment’ by their employers into a private pension, which in some cases will be a new ‘Personal Account’. Under these reforms, all employees aged between 22 and the state pension age with annual earnings above £5,035 (in 2006–07 earnings terms) and who do not actively decide not to be in a pension scheme will be enrolled automatically into a private pension. This Commentary provides an assessment of the number of individuals likely to be affected by these reforms and their characteristics. Our findings include that: any increase in pension saving among those not currently contributing to a private pension is therefore likely to be small – at least in absolute terms; and, the number of Personal Accounts is likely to increase quickly over time.