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Govt reveals early auto-enrolment opt-out rates

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Fewer than one in 10 workers who were automatically enrolled into a pension scheme between October 2012 and April 2013 decided to opt-out, according to official Government statistics.

Auto-enrolment was introduced for the UK’s largest employers in October last year. Under the reforms, companies are required to offer workers a pension scheme which meets minimum standards set out by the Government.

The Department for Work and Pensions has today published the first official auto-enrolment opt-out statistics. The Government’s definition of ‘opt-out’ only covers employees who decide to leave a pension scheme within one month of the date they were auto-enrolled.

The DWP analysed opt-out rates from a sample of 42 employers in the public and private sector whose staging date fell between October and April. The employers represent around 1.9 million workers.

The average opt-out rate recorded in the study was 9 per cent, with the majority of employers reporting opt-outs of between 5 per cent and 15 per cent.

Overall participation in workplace pension schemes across the 42 firms increased by a third, from 1.2 million employees to 1.6 million.

The DWP says opt-out rates were higher among those aged 50 and over than for other age groups. It says other factors such as gender, salary, full-time or part-time status and level of employer contributions did not have a clear impact on opt-out numbers.

Pensions minister Steve Webb says: “Seeing our largest employers report such low opt out rates bodes well for this ambitious programme, which will see millions more putting money aside for the future.

“Too few people have been saving for retirement. It is all too often something to be put off, something for tomorrow. These figures show that people really value the chance to save into a workplace pension as they know they will also get money from their employer and the taxman too.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. IMHO this is good news and is lower than the figures estimated prior to the legislation coming into force and is also in the region previously estimated earlier this year.

    The feedback we’re getting is that this relatively low level is perhaps due to the fact contributions are being phased in and where that’s the basis of the scheme, employees will only see a 0.8% reduction in pay which is perhaps palatable and at a level where the ‘hassle’ of opting out is not worth it.

  2. Agree with Paul above. I think however there is a specific intention with the Govt to skew the figures by having the opt out period limited to just 1 month of being opted in. I am very sure the figures would more accurately relfect a truer picture if this was set at 3 month period, but then that is not what Steve Webb et al want, is it? Still the fact that there are so many more with pensions now than a year ago should not be ignored. My fear comes when the micro employers have to start down this road and will not pay for advice. There will be all sorts of co*k ups and fines etc, etc. We can worry about that at the time though. Nice to get some positive news on pensions for a change

  3. Yeah, yeah,just wait until we get down to business’s with less than 50 employees,then we will see the real rate of opt outs.They are the firms least likely to be able to afford any pension scheme ,or pay for any advice,with staff on the lowest wages.How exactly will people on ‘zero contracts’ afford AE scheme,they are still employees not self employed contractors and we are told there are 1m of them now?

  4. These figures are massively skewed. When you consider many employees of the biggest employers (such as the big banks) are already in a qualifying pension, only a small proportion were auto-enrolled. This could actually mean that many more than suggested in percentage terms have actually opted out.

  5. I am already a pensioner. I did not have any option as the NI Scheme was mandatory and my contributions were deducted at source.

    I completed my forty four qualifying years for the full State Retirement Pension which on the day I became eligible was assesses at £95.25 per week.

    If I lived in the UK, the EEA or one of a select few countries like Macedonia, Barbados or the USA my pension would now be £110.15 per week. But I don’t.

    I live in Thailand and, like pensioners living in Canada, Australia and even Trinidad my pension is frozen at the rate at which it first became payable in the overseas country – no index linked increases ever.

    Automatically enrolled over fifty years ago but it seems that the only opt out clause is held by the government…and that is when it comes to paying.

    Just 4% of the UK pensioner citizenship is discriminated against in this manner – simply because they live in the wrong country – and potential emigrants beware. The Minister, who cannot present any justification for this policy (because there isn’t any) has incorporated it in clause 20 of his Pension Reform Bill.

    Disgracefully several members of the Reform Bill Scrutiny Committee revealed a remarkable ignorance of the background and implications of the policy – ignorance that was not corrected even by the minister himself.

  6. @Robthe fox

    There are some jurisdictions that are ‘in the club’ and some that are not.

    A bit of research at outset might have highlighted this for you. What of course you don’t factor in is that you live in a country where prices are hugely less than those in the developed world.

    Personally having visited Thailand on several occasions (and travelled around a bit) I cannot understand why on earth any one from the ‘first world’ would choose to live there. (There is one reason I can think of, but it should not be mentioned in a polite journal).

    Sticking to the main point of the topic I think those getting excited about these figures are in a dream world. As others have already pointed out the statistics are skewed and when finally the smaller firms (250 employees and below) are included things will look hugely different. These sizes of firms make up the biggest employment pool in the country.

    The Govt wants to put a shine on this benighted scheme and will manipulate figures without shame if they feel it will prove their point.

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