Automatic Enrolment Reflections 10 Years On

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Automatic enrolment reflections 10 years on

Last October marked the 10 year anniversary of the introduction of pension automatic enrolment legislation in the UK and, without a doubt, it has been a tremendous success story.

The Department for Work and Pensions (DWP) published a report last October, looking to quantify this success.

The report indicated that:

• Over 10 million employees have been automatically enrolled into a workplace pension scheme since 2012;
• In 2021, £114.6 billion was saved into workplace pension schemes, a real term increase of £32.9 billion compared to 2012;
• In 2021, the proportion of women saving into a pension and pension savers between the age of 22 and 29 had approximately doubled since 2012;
• 55% of eligible employees received a higher employer pension contribution than the statutory minimums;
• Opt out rates have greatly fluctuated but remain relatively low at 10%.

And to bring these figures up to date, from when the automatic enrolment legislation was introduced to the end of July 2023, over 2.2 million employers have now met their automatic enrolment duties with 10.9 million employees being automatically enrolled to add to the over 12 million employees that were already in a pension scheme. Source: The Pensions Regulator’s Automatic Enrolment Declaration of Compliance Report August 2023.

So automatic enrolment has been a success so far but how can the momentum be maintained?

The DWP discussed this topic at length in their 2017 publication ‘Automatic Enrolment Review 2017: Maintaining the Momentum’ and earlier this year the Government granted two significant extensions to automatic enrolment to broaden its scope and to encourage good pension saving habits.

• the minimum age for automatic enrolment will reduce from 22 to what is likely to be 18 although this is still to be determined;
• scrapping the Lower Earning Limit so contributions will be calculated from the first pound earned.

The Bill containing the above extensions received its Second Reading in the House of Lords in July and so is close to becoming law.

Whilst the changes will not take immediate effect, forward planning is imperative. At Cartlidge Morland, we can assist you as an employer to plan effectively for automatic enrolment, implement any changes as appropriate and, through our Employee Wealthcare^TM offering, communicate in the most suitable way to your employees. Please get in contact with one of our Employee Benefit Consultants today at enquiries@cartlidgemorland.com or on 020 7709 5560 for an initial chat.