Auto-enrolment – one year on
Described as one of the “biggest shake-ups” in the history of UK pensions, the first year of automatic enrolment proved rather more successful than originally expected. Launched on 1 October 2012 , auto-enrolment requires employers to enrol their employees in a workplace pension scheme, unless the individual decides to opt out.
The first year saw a total of 1.6 million workers automatically enrolled into their workplace pension scheme. The programme began with the UK’s largest employers and will gradually expand to include the smallest companies. By 2018, between six and nine million people are expected to have increased the amount they save into a pension scheme or to have joined a scheme for the first time.
The National Employment Savings Trust (NEST) has found auto-enrolment is becoming increasingly popular with the public – only 18% of consumers now believe it is not a good idea, compared with 27% in 2011. Crucially, while earlier Department for Work & Pensions estimates had suggested opt-out rates could have been as high as 30%, NEST, found only 9% of employees have chosen to leave their pension scheme after being automatically enrolled.
NEST also found one-third of those who opted out did so because they could not afford to remain in the scheme, 15% did so because they were saving by another means and 14% opted out because they felt they were too close to retirement age. The under-30s were found to be the least likely to opt out compared with other age groups.
For more help and advice please contact Paul Hoskin at Hoskin Financial Planning.