The Government will lower the age at which people will be auto-enrolled into a workplace pension from 22 to 18 as part of the 2017 review into auto-enrolment.
The proposal, due to take effect from the mid-2020s, is part of a package of measures the government wants to introduce to improve the coverage of workplace pensions.
These include removing the lower earnings limit, which is currently £5,875, so individuals can put more of their salary into their pensions and keeping the earnings trigger at £10,000 for 2018/19 subject to annual reviews.
A document published yesterday on the Department for Work and Pensions website estimated changing the lower earnings limit would create an additional £2.6bn in annual pensions savings in 2020/21.
This would come from an additional £1bn in employer contributions, £1.2bn in employee contributions and £0.4bn in income tax relief.
Furthermore lowering the age limit from 22 to 18 would increase the number of eligible savers by 900,000 and total annual pension savings by £770m in 2020/21.
The combined effect of lowering the age limit to 18 and removing the lower earnings limit would generate over £3.8bn in additional pension saving by 2020/21.