Millions of people in the UK are not saving enough for retirement. Automatic enrolment aims to increase private pension saving and forms part of a wider set of pension reforms designed to ensure that the UK has a pension system that enables individuals to save towards achieving the lifestyle they aspire to in retirement.
The reforms require employers to automatically enrol eligible workers into a qualifying workplace pension scheme and pay a contribution, in addition to a government contribution in the form of tax relief. The automatic enrolment duties are being staged between October 2012 and February 2018 by employer size, starting with the largest employers.
Once fully implemented, automatic enrolment aims to increase the number of individuals newly saving or saving more in a workplace pension by around nine million, within a range of eight to nine million, and increase the amount that is being saved in workplace pensions by around £11 billion a year, within a range of £8 billion to £12 billion.
This report uses the latest research and analysis from a range of sources to show what has happened since automatic enrolment began and to update key baseline indicators that will be used to monitor progress in future reports.
Key findings
Up to the end of September 2014, more than 4.7 million workers have been automatically enrolled by nearly 34,000 employers. The Department for Work and Pensions (DWP) research with employers has found that overall, the level of opt out has been broadly consistent since automatic enrolment began in 2012 at around ten per cent.
Data on workplace pension participation, collected with reference to April 2013, six months after the implementation of automatic enrolment began, showed that the number of eligible employees participating in a workplace pension increased by 0.9 million to 11.7 million in 2013. The annual total amount saved in workplace pensions was £77.6 billion, an increase of £4.3 billion from 2012.
DWP research with employers also found limited evidence of levelling down, with employers rarely reducing contribution levels in existing schemes for new members. Levels of employer awareness and understanding of their automatic enrolment duties continue to remain high, showing appropriate progress towards them being able to comply with their duties.
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