Shadow Treasury chief secretary Angela Eagle has warned that the tough economic conditions could significantly increase the number of people that opt out of auto-enrolment.
Speaking at a fringe event at the Labour party conference in Liverpool this week, Eagle said people have less disposable income so will be put off paying money into a pension.
She said: “The state of the economy may have a big impact on whether people decide to opt out or not, so we need a structure of some kind that explains to people it is in their interest to defer consumption and save.”
The Department for Work and Pensions intends to run a campaign to promote auto-enrolment but Eagle doubts it will be effective. She said: “A few adverts will not work. We are in a very consumerist society, where all the ads that people see encourage them to spend now rather than defer gratification.”
National Association of Pension Funds chief executive Joanne Segars said that while the Government is predicting bet-ween five and eight million people will be auto-enrolled into a pension, she expects the number of people that remain in a pension will be lower.
Segars said: “Given consumer confidence and economic conditions, people will say ’I cannot afford this, I am going to opt out’. I am fearful the Government is too optimistic about how many will remain opted in to their pensions.”