For employers with fewer than 30 employees , 83% of employers are using Defined Contribution occupational pension schemes, and 11% are using contract-based schemes, with only 1% using Defined Benefit schemes . 99.5% of employers using Defined Contribution occupational pension schemes, are using master trusts rather than single-employer trusts.
Kate Smith, Head of Pensions, Aegon comments on the Pension Regulator’s latest auto-enrolment commentary and analysis. “The Pension Regulator’s latest analysis shows that master trusts are the clear winners of auto-enrolment. In just six years auto-enrolment has already made a massive impact on the pension market and master trusts have become employers’ preferred choice to meet their auto-enrolment obligations. Increasingly, single employer occupational pensions schemes, both DC and DB, are not proving to be popular as employers are looking for lower cost and less administratively complex options. The new master trust rules will impact the market further, increasing standards and member protection, but also by forcing weaker master trusts to exit the market. Although this will affect the number of master trusts, the new rules will strengthen master trusts making them even more attractive to employers with master trusts and contract-based schemes increasingly dominating the pension market in years to come.
“Edging towards the 10 millionth auto-enrolee, auto-enrolment has been a game changer. In five years to April 2017, the pension participation rate in the private sector has almost doubled from 42% to 81%. Recent increases have been fuelled by smaller and micro employers which would have started from a very low base. Before auto-enrolment, employers with fewer than five employees didn’t have to offer the right to a pension let alone contribute to one.
“In 2017 alone the amount saved by eligible savers was £90.3. billion, this is only going to get bigger once the effects of the April 2018 and 2019 minimum pension contribution kicks in.”
Aegon report on Automatic Enrolment Commentary Analysis
|
