Since 2012, workplace automatic enrolment for pensions has resulted in 4.4 million new savers.
The auto-enrolment scheme means that employers are obliged to automatically sign their employees on to pension schemes, with employees having to opt-out if they do not wish to pay into a pension. Since its introduction, it has been estimated by the Institute for Fiscal Studies (IFS) that 4.4 million new pension enrollers came as a result of auto-enrolment, with young people and low earners benefiting most from the policy. The IFS also report that membership of workplace pensions has doubled among those who are not eligible to be automatically enrolled.
With regards to the influx of people enrolling in pensions that aren’t covered by auto-enrolment, the IFS said:
“The fact that there are large spillover effects of automatic enrolment on the pension participation rates of non-eligible workers is both interesting and important, even though we cannot distinguish the exact mechanism that is causing it at the moment”
The government are being encouraged to increase the minimum pension contribution rates beyond 8%, the amount they are set to reach by 2019. As it stands, auto-enrolment only required a minimum contribution of 2% of earnings by employees with employees obliged to match the first 1%.
If you would like more information on pensions and auto-enrolment, please get in touch.