LONDON (Reuters) - Britain should make workplace pension schemes compulsory to prevent millions of people living out their retirements in poverty, according to research by an influential think tank.
The report, published on Wednesday by right-leaning Policy Exchange, urged the government to scrap workers’ right to opt out of workplace pension schemes.
Britain introduced automatic enrolment of workers into their employers’ pension plans in 2012, hoping to boost savings rates, but stopped short of making it compulsory.
The think tank said saving for retirement should be seen as an obligation, and people were not saving enough under the current system.
“With an ageing population, putting money aside for later life should be seen in the same context as National Insurance contributions, taxes and even education,” said James Barty, author of the report.
Policy Exchange warned that 40 per cent of working Britons - 11 million people - were in danger of not building up big enough pension pots to ensure a comfortable old age.
Under the think tank’s proposed “Help to Save” scheme, pension contributions would also increase automatically with pay rises until a rate of 12 percent of earnings was reached, up from the current 8 percent contribution rate.
Of those retiring in 2013, the report said one in seven would be relying entirely on the state pension, while one in five would live below the poverty line.
Reporting By Jemima Kelly; Editing by Andrew Heavens