Auto-enrolment passes the 7 million mark
15 Dec 2016
Over 7 million employees with pension because of auto-enrolment
Auto-enrolment (AE) which began at the end of 2012 has resulted in over 7 million employees gaining access to a workplace pension. Data from the Pension Regulator shows that by November 2016, 7.05 million employees had signed up to an AE pension. AE has radically changed the pension landscape in the UK and dramatically increased the percentage of adults in the UK with a workplace pension. Despite this positive development, problems remain in the pensions market.
Firstly, the level of contributions into AE pensions is currently low as a percentage of employee salaries. The auto-enrolment minimum is initially 2% of which at least 1% must be paid by the employer, over time this increases to a total of 8% of which at least 3% must be paid by the employer. The question is what happens to the number of employees auto-enrolled when contributions rise (now in April 2018 and 2019): how many will drop out?
A second problem in the workplace pension market is the under and declining pension provision of the self employed. In a labour market where self employment has grown rapidly this is a serious and growing problem. Some have called for a compulsory increase in self employed National Insurance contributions with the extra tax being used to finance a self employed AE pension. At present these are just ideas.
So AE has helped the under provision of pensions in the UK but it has not ended the problem.
See the IRN Pension Dashboard for data on AE IRN Pension Dashboard