So far, the hike in auto-enrolment contribution rates has not increased the number of members who opt out of schemes.
Figures from Vanguard and Nest research arm, Nest Insight looks at the impact of the first step in raising the minimum contribution rates on Nest’s members’ enrolment and savings behavior.
April 2018 saw the first step in raising auto-enrolment minimum contribution rates, with an increase from 2 per cent to 5 per cent, of which at least 2 per cent must now come from employers.
The analysis of Nest member data shows the increase has had no material impact on retirement savings behaviour.
In the five months after phasing, member-led cessations were just 0.3 per cent higher overall than in the preceding five months.
The total proportion of members ceasing payments or member cessation increased by only 1.5 percentage points, of which some was likely down to the increase in contributions.
The report suggests member inertia continues to have a powerful impact on member retirement savings behaviour.
It points out this is reflected in the small percentage of members who reacted to the mandatory contribution savings increase and confirms the importance of inertia to the efficacy of auto-enrolment.