Up to 15 million people will be actively saving in private sector workplace schemes by 2030, with up to £495bn in defined contribution assets, the Pensions Policy Institute has found.
The report, How will automatic enrolment affect pension savings?, which was sponsored by Legal & General, analysed the potential effects that employees and employer responses to auto-enrolment could have on scheme membership and the total value of assets in private sector workplace pension schemes.
Using various opt-out scenarios, the PPI said auto-enrolment could more than double the number of people saving in DC schemes if the current opt-out rate stayed at 9%. However, decisions made by employers regarding contribution rates will affect opt-outs and the level of private sector workplace pension saving, PPI stated.
PPI senior policy researcher Daniela Silcock, said: 'This research shows that DC pensions will play a much greater role in private sector pension saving in future, though the decisions made by employers and employees will affect the total scale of saving and the value of assets in schemes.
'Based on reasonable assumptions about opt-out rates, we could see up to 15 million people actively saving in private sector workplace schemes by 2030, with up to 8.5 million of these newly saving, and up to £495bn in DC assets.
'This is a phenomenal change to the pensions landscape when you consider that without automatic enrolment there might be around 6 million DC savers and £350bn in DC assets by 2030.
'The current opt-out rate of 9%-10% has exceeded expectations, however it is worth reflecting that larger employers, who are more likely to have existing provision and extensive HR and support structures around pension saving, have just completed their staging dates.'
However, the PPI warned that the opt-out rate could grow as small to medium-sized employers start to automatically enrol their employees over the next few years and as minimum contributions rise.
If opt-out rates increased to 25%, there could be 6.5 million new savers in 2030, out of 13 million private sector workplace pension active savers, the report said.
