Auto-enrolment has proved a ‘stunning success’ with more than 80 per cent of eligible employees contributing to a workplace pension last year.
Auto-enrolment came into force in 2012 and participation has steadily increased. Figures from the Department for Work and Pensions (DWP) showed that 84 per cent of eligible workers who qualified to be in a workplace pension took part last year; an increase of 7 per cent in 2016 when 77 per cent had saved into a workplace pension.
According to DWP figures, and reported by Professional Adviser, more than 9.6 million workers have automatically enrolled and around 1.2 million employers had adhered to the auto-enrolment rules.
Steve Webb, ex-pensions minister and Royal London director of policy said the first phase of auto-enrolment had been a "stunning success", but he warned the industry not to rest on its laurels.
"We need to beware of complacency. This is a vital first step, but it is a very long journey. We now need to nudge people to save more, for example when they get a pay rise, so that more people have the financial future that they want and expect."
Adam Burn, corporate pensions technical manager at Aon, said: “With two million fewer people now under-saving for retirement thanks to auto-enrolment this is a fantastic start to addressing the lack of pension planning in the UK, but more still needs to be done.”
He suggested that there are still a number of issues to be addressed: those individuals that are self-employed or part of the gig economy; the gender pay-gap and its knock on effect on pension savings; and the increase in statutory minimum contributions in April 2019 and how this will have the greatest impact on the lowest earning employees.
Burn recommended the industry should consider how best to assist these individuals to tackle the challenges they face with regarding pension provision.
He said: “The increase to minimum contributions from a total of 5 per cent to 8 per cent coming into effect in April 2019 is likely to be the sternest test so far for auto-enrolment. The Financial Services industry, the government and employers need to ensure that there is enough information, guidance and advice available for individuals to make good decisions to help them achieve their retirement requirements.”
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