Scottish Widows has presented the Government with a "unique opportunity" to lower the pension auto-enrolment age, which could see almost £50,000 added to pension pots.

Research by the financial services firm suggested that reforming pension auto-enrolment programme could lead to people having an extra £46,000 in their pension pots if they started investing from the age of 18.

Scottish Widows said that if this reform was to be introduced, young people would be one of the groups to gain the most, as lowering the threshold for auto-enrolment to 18 and removing the lower earnings limits could increase the average 18-year-old’s future pension pot by 45%.

The new modelling from the firm’s 2024 retirement report, published in July and conducted in partnership with Frontier Economics, revealed this increase comes from an additional four years of saving and an extra £500 in savings for each year of their working life.

Along with lowering the pension auto-enrolment age, Scottish Widows has highlighted other changes that the Government could make to help UK pension savers.

These changes include reducing or removing the earnings threshold of £10,000 to benefit low-paid workers, part-time workers and multi-jobbers to benefit from auto-enrolment, and gradually increasing default pension contributions to 12%.

Scottish Widows stated that the latter policy 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 £157,000, equating to an 87% increase compared to if they only saved 8%.

Furthermore, the firm said that the Government should extend auto-enrolment to the self-employed, helping over four million people to have the same retirement prospects as employed workers.

Head of pensions policy at Scottish Widows, Pete Glancy, said: "The new Government has a unique opportunity to hit the ground running and transform pension saving for generations to come. The introduction of auto-enrolment in 2012 was a game-changer, but now it’s time to scale that up.

"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% 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."

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