Employees stick with workplace pensions
ALMOST a year after the introduction of automatic enrolment for workplace pensions, the idea has proved pretty popular.
Official figures suggest a majority of workers are opting to stay in once they’ve been enrolled.
Auto- enrolment began last Autumn with the largest employers and by 2018 anyone over 22 and earning more than £9,440 a year will be placed in a pension scheme.
Figures from the Pensions Regulator show more than a million workers have been affected so far, and by 2018 between 6 and 9 million people will be saving more in a pension or will have joined a scheme for the first time.
Employers are responsible for all the arrangements. They make a minimum contribution and the Government also pay into it in the form of tax relief.
Little wonder it’s proved to be popular.
The Department for Work and Pensions say more than 90% of those auto-enrolled so far are staying in.
A survey of the 50 biggest employers showed that, on average, just 9% had opted out.
Contrary to the popular belief that young workers aren’t interested in pensions, the findings suggest they are leading the way, with more under-30s staying in a pension scheme than any other age. However, former Government pensions adviser Dr Ros Altmann believes more needs to be done. “So far auto-enrolment is a huge success in terms of encouraging workers to belong to their employer’s pension scheme and take advantage of the employer’s contribution,” she said. “The opt-out rate is far lower than previously might have been expected.”
Dr Altmann believes the scheme may prove less popular with employees of smaller businesses.
“Large employers have heavily promoted their schemes. Smaller firms are less likely to be quite as enthusiastic, especially those that have not offered pensions before.
“They’re unlikely to be so willing or able to devote such resources.”