Automatic-enrolment increased pension scheme membership to 88 per cent in April 2015, the Institute for Fiscal Studies revealed.

In its report Automatic enrolment and pension saving in the UK, the IFS found that average private sector pension membership in employers who have introduced auto-enrolment surged by 37 per cent to 88 per cent.

The IFS analysed data from almost half a million employers from April 2012 to April 2015 looking at how contributions to workplace pensions by private sector employers and employees have been impacted since the introduction of auto-enrolment.

Funded by the IFS retirement consortium, the study highlighted that by April 2015 pension saving increased by £2.5bn per year.

Furthermore, the number of private sector employees in a workplace pension nearly doubled from 5.4 million in 2013 to 10 million in April 2015. It was estimated that 4.4 million of the 4.6 million increase was a result of auto-enrolment.

The IFS noted that pension coverage grew the most among those aged 22 to 29, who had been with their employer for less than a year and fit into the lowest quarter of eligible earners, between £10,000 and £16,730. The introduction of auto-enrolment increased workplace pension membership by over 50 percentage points to 80 per cent among this group, where membership was the least common prior to the reform.

IFS senior research economist and co-author of the report Jonathan Cribb, said: "Automatic enrolment has been very successful in boosting membership of workplace pensions. This has been particularly true of younger employees aged 22 to 29 and relatively low earners on between £10,000 and £16,000 per year.

“Significant numbers of those not directly targeted by the policy have also been brought into workplace pensions, such as those earning less than £10,000. The story of automatic enrolment is certainly a case of so far so good. A key issue is whether those brought into workplace pensions at low contribution rates will remain in when minimum contribution rates start rising."

The number of people saving and the total sum contributed to workplace pension schemes through auto-enrolment is likely to show continued growth as minimum contributions eventually rise from two to eight per cent of earnings.

The Department for Work and Pensions will publish its terms of reference for the 2017 review of AE in the next few weeks.

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