Even better! Why wouldn't people want to go for that? Unless they are junkies and not expecting to make it past 50 it's a great deal.
My life expectancy is less than 50 years old and I've never even smoked, let alone taken drugs or been a junkie, but thanks for that.
As for, putting it into a "miserable savings account" means that it is safe. With this auto enrolment scheme, you put your money in and its gambled. If the scheme fails, you lose. If you die before retirement, you lose. You die just after retirement, you lose. Your family lose too as its only paid for a short while despite however much you might have in the account.
Lets look at some actual figures instead of making assumptions based on perfectly performing gambles.
A 50-year-old earning £20,600 a year will, after 16 years of paying into the scheme, be left with an annual income of just £940 a year, or £18.07 a week at age 66. The maths, though, makes much more sense for younger entrants obviously.
However, because of the way the benefits system works, lower earners will find that when they come to retire, much of the pension income is cancelled out by the loss of means-tested benefits, such as housing benefit.
Its all good and well if you are in a well paying job for life, but think of those on lesser wages or those people who are in industries where the only jobs are contract roles so that they change empoyers every 6 months.
There is also a good reason to be sceptical, the last "big pensions revolution" – the launch of stakeholder pensions in 2001 – ended up being something of a flop. Someone who invested £100 a month between the launch in April 2001 and the end of March 2012 would have contributed £13,300 of their own cash, but would be sitting on a fund worth just £14,600 after charges, which looks pretty familiar....
The biggest issue with auto enrolment is the way in which it interacts with benefits. If you have to rely on them in old age through disability such as blindness, you will find that for every pound of "excess income" you will lose 65p of housing benefit and 20p of council tax benefit.
Add to this that you have to pay a fee for management of the scheme and you will actually lose out unless you are a higher wage earner.
When you do come to draw on your pension, if you chose a lump sum or to withdraw it, remember that the companies that hold your money and charge you a fee for gambling your money will also charge an exit fee and also insist on you paying to speak to a financial advisor before you take your money out. They will also take as long as possible (in some cases, 3 months) before you can access your money.
But I digress. The whole industry needs a shake up.
