Half of all employees are now paying into workplace pension schemes after the governments auto-enrolment scheme led to the first increase in the number of savers in seven years, official figures have revealed
According to the Office of National Statistics' Annual survey of hours and earning 2013 report, participation rates in pension schemes increased by 3 percentage points compared to 2012.
In the private sector, 51% of employees within large employers (5000+ employees) were members of a workplace pension in 2013, up from 36% in 2012. Bigger employers were the first to be included in the auto-enrolment programme.
Overall, 85% of public sector employees and 36% of private sector employees had a workplace pension scheme in 2013.
The figures were collected in April 2013 when auto-enrolment had been running for 6 months and enrolment stood at 500,000. Latest figures from the Pension Regulator show this has now climbed to 3.2 million.
The ONS said introduction of automatic enrolment represented 'a major change in the UK workplace pension system', with rollout set to continue until 2018 to extend scheme membership.
Responding to the figures, pensions minister Steve Webb said the data showed the government's reforms were working. 'More people are saving and this shows that even at an early stage automatic enrolment is having an extraordinary impact.
'The scheme has gone from strength to strength and now over 3 million people have been automatically enrolled. Ensuring people can plan for their retirement is paramount to a strong economy.'
Barnett Waddingham's senior consultant Malcolm McLean said the ONS figures confirmed the early success of auto-enrolment.
'However, while this is extremely good news, it is still too early to be 100% certain of the overall outcomes of auto-enrolment,' he added. 'We are now approaching a critical stage where smaller employers are coming on-board. Smaller employers have less resource to comply with auto-enrolment regulations, so we may be faced with much lower success rates than we have seen up to now.
'Once the full project is complete in 2018, it will be necessary to review the full results of auto-enrolment at that stage to gain an accurate picture of its success. Thereafter much also needs to be done to encourage higher contribution levels by introducing auto-escalation where necessary.'
Towers Watson head of UK pensions John Ball added: 'When this snapshot was taken, only the biggest employers in the country were legally required to automatically enrol people into pensions. Today, you'd get a healthier picture. The size threshold for employers who must comply with the automatic enrolment rules has come down from 6,000 workers then to 250 now.'