Government-backed implementation of auto-escalation of defined contribution pension contributions is key to the long-term success of auto-enrolment, it has been argued.

Speaking at the Pensions and Lifetime Savings Association Annual Conference, Aon partner and head of DC consulting Sophia Singleton explained how auto-escalation of minimum DC contribution rates is a possible solution to solving pension saving adequacy issues.

"Adequacy is one of the biggest issues we face," Singleton stated, "we do need the government to look beyond Brexit and increase the default soon if we are going to make auto-enrolment a success."

It was noted that the UK should learn from the US who has already implemented an auto-escalation strategy for retirement savings, the "save more for tomorrow" policy.

"Members who use it [auto-escalation of pension contributions] are twice as likely to hit their target than those who don't," Singleton highlighted.

Nonetheless, due to cost and administration, at present and in the near future "a sub-set of employers will look to automating default contributions", she added.

Also speaking in the "Pensions beyond the horizon" session, Bank of America Merrill Lynch Pension Scheme Skip McMullan highlighted the fact that "DC is about the individual" and so "more evidence of doing this for the member" is needed.

Skip agreed that "once people are in", they are less likely to opt-out, due to inertia and understanding of the benefits. "Let compound interest do the heavy lifting," he said.

In order to further accelerate the progress of guaranteed savings success both speakers discussed the impending role of artificial intelligence in the space.

"Artificial intelligence will have to come to pensions," Singleton said. "We are putting our lives in the hands of driverless cars, so surely putting our finances in their hands [artificial intelligence products] is less risky."

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