Around 88 per cent of employers with fewer than 30 employees are using defined contribution trust-based schemes to fulfil their auto-enrolment obligation, data from The Pensions Regulator (TPR) has revealed.
The report found that DC trust-based schemes were more popular with employers with fewer than 30 employees than employers with more than 30 employees, with only 55 per cent of larger employers using DC trust-based schemes.
Furthermore, only 1 per cent of employers with fewer than 30 employees used defined benefit schemes for auto-enrolment, while this figure was 9 per cent with employers with more than 30 workers.
Around 35 per cent of the larger schemes were using personal pension DC schemes in comparison to 11 per cent of the smaller schemes. Hybrid pension schemes were uncommon, with only 2 per cent of the larger schemes using them, while there were zero hybrid schemes used by the smaller schemes.
Employers using DC auto-enrolment schemes preferred to use master trusts rather than single-employer trusts, with 99.5 per cent using master trusts.
Aegon head of pensions, Kate Smith said: “The Pension Regulator’s latest analysis shows that master trusts are the clear winners of auto-enrolment. In just six years auto-enrolment has already made a massive impact on the pension market and master trusts have become employers’ preferred choice to meet their auto-enrolment obligations.”
The proportion of UK staff in a workplace pension scheme increased to 84 per cent in 2018. This is an increase from 77 per cent of workers in 2017, when 7.7m were automatically enrolled by March.
TPR’s study found that the number of staff automatically enrolled also rose, with 9.5m being automatically enrolled by March 2018.
Smith added: “Edging towards the 10 millionth auto-enrolee, auto-enrolment has been a game changer. In five years to April 2017, the pension participation rate in the private sector has almost doubled from 42 per cent to 81 per cent.
“In 2017 alone the amount saved by eligible savers was £90.3bn this is only going to get bigger once the effects of the April 2018 and 2019 minimum pension contribution kicks in.”