Department for Work and Pensions (DWP) research published today (8 August 2013) gives the first official indication of how well the government’s landmark automatic enrolment scheme, to get people saving for their retirement, is being received.
The qualitative research of the 50 biggest employers shows that on average just 9% of people have opted out. Previously, DWP research with workers across all business sizes found that 30% were likely to opt out.
The findings also suggest that young people are leading the way in the savings revolution, with more under 30s staying in a pension scheme than other age groups.
The duty of enrolling workers into a pension scheme started with the largest employers in October last year and will extend to the smallest firms by 2018. Automatic enrolment was introduced to address chronic under-saving with millions not putting aside enough for retirement, and only 1 in 3 private sector employees paying into a workplace pension.
This news comes on the back of figures published last month by The Pensions Regulator that showed over 1 million workers have been enrolled into a pension. By 2018 it is expected that between 6 and 9 million people will be saving more into a pension or join a scheme for the first time.
Minister for Pensions Steve Webb said:
"Seeing our largest employers report such low opt out rates bodes well for this ambitious programme, which will see millions more putting money aside for the future.
Too few people have been saving for retirement. It is all too often something to be put off, something for tomorrow. These figures show that people really value the chance to save into a workplace pension as they know they will also get money from their employer and the taxman too.
The sooner people start a pension the better, and this report shows that young people are keen to take charge and plan for their future."
Across all the employers in the study the opt out rate was 9% with most individual employers reporting rates of between 5% and 15%. This backs up anecdotal information released by high-profile employers, including McDonalds, John Lewis and Asda.
Overall participation in workplace pensions has increased among the employers surveyed from 61% to 83%.
As expected opt out rates were higher, at 16%, where staff had already opted out of a workplace pension. In a typical example the opt out was highest for those nearing retirement in the 50 plus age group – at 15% – and lowest in the under 30s age group at 8%.
Commenting on the results, Tim Jones, CEO of NEST, said:
“These excellent results reflect what we’re seeing at NEST. Opt out levels at NEST are less than 10 per cent so far, which suggests the message is hitting home - we all need to save more for tomorrow.
“Most of our members are relieved they’re getting a helping hand to prepare for the future. But there’s no room for complacency. Many of those being automatically enrolled work extremely hard to make ends meet and finding a bit extra each week is a big ask.
“Starting saving as soon as possible and keeping up regular contributions are the best ways to build up a decent pot.”
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