FOR IMMEDIATE RELEASE 19 March 2018
A survey* of 691 British businesses by workplace pensions provider NOW: Pensions has revealed that over half (53%) expect the government to make workplace pension saving compulsory, with no ability for savers to opt out, at some time in the future.
Currently, all workers aged 22 to State Pension age, earning over £10,000 a year are automatically enrolled into a workplace pension scheme which both the employer and employee contribute to. Workers can opt out, but so far opt out rates have been low at around 9%. According to an analysis of NOW: Pensions’ members, women and older age groups are more likely to opt out**.
Over a quarter (28%) of businesses surveyed said they thought it likely that beyond 2019, the government would look to increase auto enrolment minimum contributions beyond 8%. A similar proportion (27%) thought that the government might look to re-balance contributions so that employers paid either the same or a greater proportion than employees. Only 12% thought that the government wouldn’t make any further changes to the auto enrolment policy.
Commenting on the findings, Adrian Boulding, Director of Policy at NOW: Pensions said: “On the face of it, very few people seem to be opting out of workplace pension saving so, right now, it seems unlikely that the government would decide to make it compulsory. But, the biggest test for auto enrolment is yet to come with minimum contributions rising in April this year and again next year. We will see employee contributions rise from 1% of qualifying earnings to 5% as part of the phased introduction of auto enrolment.
“If these rises result in a significant increase in the number of people turning their backs on workplace pension saving, the government may need to consider putting compulsory pension saving back on the table. If opt outs remain low, then this will give government confidence to look at ways of increasing contributions so that auto enrolled savers have a better chance of a comfortable retirement.”
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Amy Mankelow / Cheriton Lee
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Notes to editors
*Research conducted by YouGov with 691 B2B senior decision makers between 29 January and 2nd February 2018.
** NOW: Pensions’ opt out rates January – December 2017
Age Band Opt out rate (male) Opt out rate (female) Opt out rate (all)
22-29 3% 5% 4%
30-39 5% 7% 6%
40-49 7% 9% 8%
50-59 12% 15% 13%
60-64 30% 38% 33%
All ages 7% 9% 8%
NOW: Pensions www.nowpensions.com @nowpensions
NOW: Pensions is one of the UK’s largest workplace pension providers with over a million members and tens of thousands of employers from a wide range of sectors. A company wholly owned by Danish pension scheme ATP; one of Europe’s largest pension funds. NOW: Pensions entered the UK market in 2011 with a simple and cost effective workplace pension designed specifically with the auto enrolment market in mind.