Auto-enrolment hailed a

A review of workplace pensions by the Department for Work and Pensions has found that auto-enrolment "has worked" and "the financial behaviour of millions of people has changed".

David Gauke, secretary of state for work and pensions, said: "For an entire generation of people, workplace pension saving is the new normal. And my mission now is to make sure the next generation of younger workers have the same opportunities."

The review has recommended that auto-enrolment should be offered to those aged 18 and over, introducing 900,000 young people into saving an additional £800 million through a workplace pension.

In addition, it says workplace pension contributions should be calculated from the first pound earned, rather than from a lower earnings limit, simplifying the way employers assess their workforces and calculate contributions. The earnings trigger will remain at £10,000 for 2018/19, subject to annual reviews.

Neil Carberry, managing director of the CBI, said: "Automatic enrolment is a success story. Across the country, more lower earners are saving for their retirement, based on an innovative approach designed and delivered in partnership by businesses, employees, Government and the financial services industry."

However, he warned against making changes too quickly. "Today's report … makes some sensible suggestions about how to evolve the system in future. But much of the original plan is still to be delivered, with contribution rates rising over the next two years. For firms who are facing rising costs across the board - and employees with other legitimate calls on their income - it is right to complete this first phase and let it bed in before making further changes. A timeline of the mid-2020s for new proposals would be sensible and enjoy business support."

The Federation of Small Businesses (FSB) has also urged caution about future changes. Mike Cherry, FSB national chairman, said: "Employers are already seeing the cost of employment rising significantly and by 2019 employer contributions for pensions will triple to 3%.

"Requiring employers to contribute from the first pound of earnings, will mean that, by 2019, hundreds of thousands of small employers will have to pay up to £180 more per employee each year. For employers in certain sectors … where margins are tight , this will really add up."

However, Cherry welcomed the review's commitment to addressing pension needs for the self-employed. "Auto-enrolment has clearly helped employees to start saving for their retirement, but the self-employed have been left behind and have not been incentivised to do the same. So it's good to see the Government testing savings solutions for the self-employed. Just a third of our self-employed members are saving into a private pension scheme, so we hope to see new flexible savings options that work for the changing workforce."

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