The trouble with Auto Enrollment
AE is a somewhat limited scheme in that the typical minimum (which a fair number of employers will do no more than) maxes at 8%, 4% employee, 1% tax relief on employee and 3% employer.
This is not applied to all earnings but to band earnings, over £5772 under £41,865. Employments are not connected so where someone has two part time jobs they will only have contributions over the minimum on each, so 2 employments at £10,000 p.a. gives 2 bands of £4,228 each with 8% contributions, not really a significant contribution at about £676 per year. Even if one employment of £20,000 the contribution is only £1,138 p.a.
The trouble is that lower paid employees, often shuffling two jobs, will consider they have taken care of their pension needs but what they will eventually receive as a pension from a lifetime into such schemes will just not be enough.
As a rough rule of thumb the norm target is a pension equal to 2/3 of salary when employed (and for the lower paid this will be pretty meagre), re my example this would be a £13,333 per year. The state pension is currently circa £5,876 so other pensions would need to be £7,457.
The sort of fund needed to currently buy an annuity at age say 68 of £7,457 with inflationary increase will be, in today's terms, circa £175,000
Now in real terms £676 per year over say 46 years is not going to do it.
So a scheme, brought in to protect the lower paid/ non pensioned ,is going to lull them into a false sense of security and come 2080 a lot of people yet again will not have provided for their retirement. And of course employers will gradually reduce the benefits they currently offer as has been the trend for years (Not many defined benefit private sector schemes these days, virtually all are money purchase)
So, the moral, do not depend on state sponsored schemes (they will probably get changed at least 7 times during your working life anyway) and start saving very early, a £1 saved in your 20s is likely worth about £5 in your 40s. Delaying starting is the surefire way to enjoy a meagre retirement.