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Govt hails ‘extraordinary success’ of auto-enrolment

Auto-enrolment has been an “extraordinary success”, the government has said, as a new report shows that small business workers have benefited significantly from the reforms.

A study by the Institute for Fiscal Studies shows that almost half of the country’s small business workforce has now been placed into a workplace pension, representing a 44 percentage point increase in the participation rate.

The IFS estimates that the number of small business employees saving into a workplace pension would have been around one in four without auto-enrolment, but this has now reached seven in 10, up from one in six before the advent of auto-enrolment in 2012.

Around a quarter of private sector workers in the UK are employed by a small business.

Pensions minister Guy Opperman says: “Automatic enrolment has been an extraordinary success, transforming pension saving and improving the retirement prospects of more than 10 million workers already.

“As this report shows, small business owners all over the UK have made this possible, with participation rates estimated to have been increased from 26 per cent to 70 per cent due to automatic enrolment. This radical reform is creating a new relationship between the employee and their employer.”

Royal London pension specialist Helen Morrissey says: “Today’s data shows the enormous success auto-enrolment has had in getting Britain saving for retirement. It is also positive to see employers getting the support they need with 70 per cent of small and micro employers saying they found the ongoing administration of their scheme easy.

“We now need to build on this success by widening the scope of auto-enrolment so that it includes the self-employed – a group that have up until now been underserved by pensions.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Success for whom? Yes, there are those who now have what can be called a pension who had nothing before. But for many it is a second rate scheme that will provide precious little in the way of retirement benefits. Yes certain providers (those who like to provide sub-standard products) like it and the fund managers who offer these second rate funds with restricted choices are keen too.

    But do these schemes even come close to the Personal pension from decent providers. DO these schemes ensure that employers just fund the minimum? Isn’t is case case of sinking to the LCD?

    Isn’t it after all nothing other than a tax? Isn’t it an abrogation of Government responsibility? Increase NI by 8% and provide a decent State Pension and allow those with sense to make their own personal pension arrangements without all the conditions and limits currently being imposed. Yes, we want you to save, but don’t save too much as we don’t want any inequality.

  2. Given the stiff penalties imposed on businesses that fail to comply, how could AE be anything other than a success?

  3. MM, can you ask where these people buy their binoculars from ?

    I what some

    The only logic is, you need these to see this huge success !

  4. Christopher Petrie 11th April 2019 at 9:00 am

    Sorry Mr Katz, but your dislike of an excellent pension program that has given millions of people a savings scheme for the first time in their life, is now totally without justification (it always was really).

    How can savings be a tax?
    How can tax relief on savings be a tax?
    How can a Company pension contribution be a tax?

    Working class people are finally getting some kind of pension scheme, after decades of being denied them.

    And what’s wrong with a managed fund capped at 0.75% pa charge?
    Why were the Allied Dunbar and Abbey Life schemes better?

    How were initial units and transfer penalties better?

    How were MVAs on with profits funds better?

    No, I’m sorry but the world has moved on from your time in business and auto-enrollment is giving some security for working class people, for the first time ever.

    Some of them will even become IFA clients in the future!

    • 1. The plans you quote are no longer available.
      2. Few IFAs deal with those you call the ‘working class’ (Most people work)
      3. These plans have allowed firms to trade down from previous (better) schemes.
      4. There are those that have (or had) perfectly good Personal Pensions with unfettered choice (EG Old Mutual CRA) who are now dragooned into AE.
      5. Of course the employer contribution is a tax. It is a compulsory contribution. How does it differ from NI? The net payment by members is also a tax. They don’t get a choice.

      I’m afraid your defence points are far from valid. That’s not to say I am against people saving,but it should be a free choice. I repeat – it is an abrogation of Government responsibility – they should be providing a decent state pension for all – even if that means increasing tax. Indeed what is the difference if we swapped AE contributions for an equivalent increase in tax as far as the participants are concerned? AE is just a fillip for the providers who love it.

      • Christopher Petrie 11th April 2019 at 4:28 pm

        1. Good! They were dreadful.
        2. That’s why we needed AE!
        3. Can you provide a single example? I’ve not come across any.
        4. People can opt out if they wish or stay in the AE scheme and top up elsewhere.
        5. Paying your staff a pension is not a tax! It’s (rightly) a cost of business to directly compensate the labour you employ.

        Nobody (also correctly) trusts any government with pensions – they’ve been let down too many times.

        10 million people with AE pensions can’t all be wrong!

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