Research published by the Department for Work and Pensions (DWP) shows that more than 90% of people who have been placed into a workplace pension by their employer are staying in.
The qualitative research of the 50 biggest employers, which gives an indication of how well the Government’s automatic enrolment scheme is being received, found that on average just 9% of people have opted out, in comparison to previous DWP research with workers across all business sizes, which found that 30% were likely to opt out.
Automatic enrolment started in October 2012 and involves a certain amount of an employee’s wage being automatically put into a savings pot for their pension (assuming they are aged 22 or over and earning at least £9,440 a year).
Employers are then obliged to pay in as well, with the Government adding extra through tax relief.
Experts and ministers insist it is crucial that people make a start at an early stage in their working lives, and the DWP figures suggest that there are currently more under-30s staying in a pension scheme than other age groups.
The news comes in the wake of last month’s figures by The Pensions Regulator, which showed that more than one million workers have been enrolled into a pension.
By 2018, it has been suggested that between six and nine million people will be saving more into a pension or join a scheme for the first time.
Commenting on the findings, Minister for Pensions, Steve Webb, said:
“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.”
He added:
“The sooner people start a pension the better, and this report shows that young people are keen to take charge and plan for their future.”
The research also found that overall participation in workplace pensions has increased among the employers surveyed, from 61% to 83%, while opt-out rates were higher, at 16%, where employees had already opted out of a workplace pension.
Opt-out rates were highest (15%) in the 50-plus age group and lowest (8%) in the under-30s age group.