Automatic enrolment opt-out levels have “remained consistent” following the first planned contribution rise in April 2018, a new report has revealed.
Publishing its Automatic Enrolment evaluation report 2018 today, 18 December, the government said that as of June 2018 opt-out levels have remained the same, despite an increase from 2 per cent to 5 per cent, of which the employer pays 2 per cent and the employee 3 per cent.
From April 2019, contribution rates will rise to 8 per cent, with the employer contributing 3 per cent and the employee 5 per cent.
According to The Pensions Regulator’s latest compliance report, the number of people who have been automatically enrolled into a pension scheme has increased to 9.96 million since the start of AE in 2012.
TPR also said that it issued 61,000 compliance notices in 2017/18, up from 34,000 from the previous year.
Commenting on the findings, Quilter head of retirement, Jon Greer, said: “The power of nudging and inertia should not be underestimated though as the review shows that rates of opt-outs and cessations have remained consistent, despite the increase.
“However, there is another increase in minimum contributions set for next year and with economic uncertainty raging rampant, it’s far from clear what the reaction will be.”
Furthermore, the number of eligible employees participating in a workplace pension has increased from 10.7 million (55 per cent) in 2012, to 17.7 million in 2017 (84 per cent).
The total amount saved by employees hit £90.3bn in 2017, a £4.3bn increase on 2016, down to a £4bn increase in the private sector and a £0.3bn rise in the public sector.
Royal London director of policy, Steve Webb, said: “The amount of money going in to pensions through automatic enrolment is up over £4bn in a year and the April 2018 step-up in contribution rates has done nothing to put people off pension saving.
“Even where people opt out, over half a million have now been automatically ‘re-enrolled’ which will reinforce the message that saving in a pension is the normal thing to do when you have a job”.
Awareness and understanding has also increased, with 93 per cent of micro, small and medium-sized employers aware of their on-going AE duty.