The Government hopes to get teenagers “into the habit of saving” by extending automatic pensions to those as young as 18 – but critics have attacked ministers for a “shockingly lethargic” pace of change.

Ministers plan to lower the starting age for auto-enrolment on workplace savings schemes from the current age of 22, and it will apply to all those earning more than £10,000 from one job.

It is estimated the move could introduce 900,000 young people into saving an additional £800m through a workplace pension.

Work and Pensions Secretary David Gauke described the proposal as “a really important next step”.

He told the BBC’s Andrew Marr Show: “We believe that what we’ve seen over the last few years since auto-enrolment came into place in 2012 is much greater saving for pensions.

“After decades of declines in workplace pension saving we are now seeing increases.

“We want to extend that benefit to people under the age of 22. At the moment the starting point is 22, we’re now lowering that to 18.

“That, I think, will get more people into the habit of saving.

“It will mean that younger people will be saving for those extra years, so that obviously is significant when it comes to their retirement.”

David Gauke
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Work and Pensions Secretary David Gauke wants to get ‘more people into the habit of saving’

The proposal is included in a review of automatic enrolment, which was launched in 2012. Other recommendations including calculating contributions from the first pound earned, and for the Government to look at ways to boost pension opportunities for 4.8 million self-employed workers.

Jamie Jenkins, head of pensions strategy at Standard Life who sits on the Government’s external advisory group, said: “The measures we are announcing today will ensure that as many people as possible have the opportunity to start to build up pension savings.

“Since this policy was introduced it has enjoyed huge success and it is right this is extended to include young workers, and those who might not have a standard employment setup.”

But former pensions minister Sir Steve Webb, who helped oversee the introduction of auto-enrolment, criticised the Government’s aim to introduce the reforms in the mid-2020s.

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Now director of policy at Royal London, the ex-Liberal Democrat MP said: “There are some great ideas in this review, including starting pension saving at age 18 and making sure that every pound that you earn is pensionable.

“But the proposed pace of change is shockingly lethargic. Talking about having reforms in place by the mid-2020s risks leaving a whole generation of workers behind.”