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Auto enrolment increases pension membership

The percentage of private sector employees in a workplace pension scheme increased from 26% in 2011 to 35% in 2013, according to research commissioned by the Department for Work and Pensions.

The Employers Pension Provision survey shows that at the time of the research, 2% of private sector businesses had passed their staging dates. These firms accounted for 32% of all private sector employees.

Key findings:

  • 65% of staged employers already had a workplace pension scheme set up when the reforms were passed
  • Of these, 94% retained their schemes after staging and 92% did not change their contribution rates
  • 12% of firms that had not yet reached their staging date already had members on a workplace scheme
  • 59% of these expected to retain their current scheme

Lucy Stokes, co-author of the report, said that the news was a “positive sign” but warned of “significant challenges ahead.”

“Among employers yet to pass their staging dates, many do not currently have a workplace pension scheme in place, and a sizable proportion are uncertain about their plans,” she said. The research also revealed that opt out rates were between 9% and 10%. The Government has now halved its predictions of opt out rates from 30% to 15%.

Tim Jones, chief executive of the National Employment Savings Trust, said:

“If these predictions are correct it’s very promising news for future generations of pensioners, who’ll be better off as a result.

“Our current opt out figures are around 7% and hopefully they’ll continue to stay low.”