The democratisation of pensions as auto enrolment reaches 8.5 million
12 Sep 2017
Almost 80% of eligible employees auto enrolled
Auto enrolment (AE) has led to a dramatic change in the UK pension landscape. Data from the Pension Regulator shows that by August 2017, 8.527 million employees had been auto enrolled into pensions. Since the auto enrolment reforms were introduced in 2012, the overall proportion of all employees saving into a workplace pension has increased from 47% to 68% (April 2016). Over this same period of time, the overall proportion of eligible employees saving into a workplace pension increased from 55% to 78%.
The real test comes after April 2019
The expansion of workplace pension coverage has democratised workplace pension ownership, drawing in younger and less affluent employees into the workplace pension net. A challenge in the future is keeping these younger and less affluent employees enrolled when employee contribution rates rise in April 2018 and April 2019. In April 2018, the current employee contribution rate rises from 1% to 3% and then increases to 5% in April 2019. It is after April 2019, that the true long-term success of AE will be measurable.