Auto-enrolment is a good start but there is a great deal more work to be done.
The key highlights of the Regulator’s update are: 21,303 employers have confirmed that they met their auto-enrolment duties; 4,032,000 eligible jobholders have been automatically enrolled; 8,602,000 workers were already members of a qualifying scheme; 423,000 eligible jobholders have had the defined benefit or hybrid scheme transitional arrangements applied to them and 4,443,000 workers did not fall into any of the above categories
Tom McPhail, Head of Pensions Research at Hargreaves Lansdown: “This shows that nearly 4.5 million employees are missing out on workplace pension membership. In addition there are around a further 4.5 million self-employed in the UK who also don’t enjoy the benefit of being auto-enrolled into an employer funded workplace pension. Only last week the DWP produced updated analysis which shows that 11.9 million people are under-saving for retirement. Very broadly, anyone who is not contributing at least 12 percent of their salary a year to a pension probably isn’t saving enough. In the meantime, auto-enrolment has been cited as one of the downward pressures on earnings growth.”
Looking beyond 2018 and the completion of auto-enrolment, there will be two key challenges: Increase pension participation rates further and increase pension contribution rates. A range of solutions will be needed to take us beyond the simple starting point of auto-enrolment: Auto-increases to contributions; better employee engagement and the broadening of auto-enrolment pensions to encompass workplace ISAs and emergency cash accounts.
