The government has been urged to bring forward a raft of auto-enrolment (AE) changes, after analysis from Scottish Widows suggested that this could see 4.7 million more savers receiving pension contributions from their employer.

The group said that the new government has a "unique opportunity to hit the ground running and transform pension saving", calling on the new government to push ahead with four "incredibly powerful" auto-enrolment reforms.

In particular, Scottish Widows encouraged the government to lower the auto-enrolment age from 22 to 18-years-old, arguing that this would see younger people engage earlier with pension saving and add as much as 15 per cent to pots.

It also called on the government to reduce or remove the earnings threshold of £10,000, to allow low-paid workers, part-time workers and multi-jobbers to benefit from auto enrolment, estimating that this could increase pension pots for low earners by as much as 150 per cent.

However, it argued that that those on low wages should be permitted to opt out of the employee contribution, whilst still benefit from the employer contribution.

Younger savers have the most to gain from these reforms, according to Scottish Widows modelling, conducted in partnership with Frontier Economics, which found that lowering the age threshold for auto-enrolment to 18 and removing the lower earnings limit could increase the average 18-year-old’s future pension pot by £46,000 - a 45 per cent increase.

Work on these reforms is already underway, as a Private Member's Bill to extend AE to lower earners and younger workers was granted Royal Assent last year, although a consultation on these changes is still awaited.

However, Scottish Widows encouraged the government to go further, calling on the new government to gradually raise default pension contributions to 12 per cent.

This, according to the group’s analysis, could put 370,000 people on track for affording at least a basic lifestyle in retirement who are not currently and increase the future pension pot of an average 18-year-old by an "incredible" £157,000.

This represents an 87 per cent increase compared to if they only saved 8 per cent.

However, it argued that this increase should be accompanied by "clear and consistent" messaging that those who can afford to do so should save at least 15 per cent.

In addition to this, the group suggested that the government should look to extend auto-enrolment to the self-employed, as well as establish a Lifetime Savings Commission to seek consensus on pensions, housing and investing, with particular attention paid to specific groups.

"The introduction of auto-enrolment in 2012 was a game-changer, but now it’s time to scale that up," Scottish Widows head of pensions policy, Pete Glancy, stated.

"Reducing the age threshold to 18, lowering earning limits, bringing in self-employed workers and upping default rates all build on the existing framework and would be incredibly powerful in getting more people in the UK saving enough for the future, while also looking at how people’s financial goals complement each other, rather than compete.

“This is particularly true for younger workers, but the positive impact would be felt across all ages. Indeed, it’s important to remember that by regularly contributing into a workplace pension, employers have a legal obligation to pay at least 3 per cent if not more.

"This is effectively boosting future incomes. Now is the time for action and commitment to improving pension savings and this should form a pivotal part of the new government’s plans.”

---