Auto-Enrolment Opt-Out rates
More than 9.5m UK workers have now been subject to “auto-enrolment” into a pension scheme. Yet these same employees also have the choice to subsequently opt-out of pension savings. So where in the UK is non-participation in pension savings the most likely?
Recent research from a large pensions provider1 suggests that the North of England represents the highest area for such opt-outs. The research showed 8.2% of those enrolled in Cumbia chose not to continue saving in their company pension plan (declining their company contribution as a result).
The research found the four areas with the highest opt-out rates are:
- Cumbria 8.2%
- County Durham 8.0%
- Tyne and Wear7.7%
- North Yorkshire 7.6%
This compares with the lowest rates that were found in Bedfordshire (3.5%) and Northamptonshire (3.2%).
This perhaps suggests there‘s something of a North / South gap with regards to pension savings. But the reality is that any employer in any region might face a higher opt-out rate than is ideal. It should also be noted that these figures may yet worsen, given that the minimum auto-enrolment contributions allowed for by legislation went up in April this year, and will increase further in 2019.
The bottom line is that employers need to ensure their workforce fully understands and appreciates the benefits of the company pension offering – and in particular the employer pension contribution. It’s therefore strongly recommended that the communication of the pension offering is regularly revisited. This isto ensure all employees are fully aware of the benefits of membership. and indeed the wider employee benefits package as well.
For more information on our pension education and communication services please speak to our Workplace Pensions Team.
1. Now: Pensions Research 130618