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02

Auto-enrolment brings in 10 million pension savers  

Open-access content Tuesday 12th February 2019 — updated 5.50pm, Wednesday 29th April 2020

More than 10 million Brits are now saving into a workplace pension thanks to automatic enrolment, The Pensions Regulator (TPR) confirmed yesterday.

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This adds to the 11.5 million that were already members of a scheme before auto-enrolment was introduced in 2012, although there are still 9.3 million outside workplace pension saving.

And there are fears that a hike in pension contributions to 5% of earnings this April could lead to a rise in opt-outs as employees baulk at further deductions to their pay.

There is currently no evidence of this, with opt-outs running below 10% of members, although there are also concerns that Brexit could have a negative impact. 

"Getting 10 million more people to save is an astonishing success," Hargreaves Lansdown head of retirement policy, Tom McPhail, said. "There are though still some significant challenges ahead.

"A hard no-deal Brexit in March, closely followed by an increase in deductions from peoples' pay could be a toxic combination, leading to an economic slowdown, increased opt-outs or both."

McPhail went on to say that the pensions industry is "barking up the wrong tree" by demanding higher minimum contributions, and that engaging members with savings was more important.

"Perhaps the biggest challenge is to turn disengaged members who have been auto-enrolled into active investors who can make sensible choices about what to do with their money," he added.

This sentiment was echoed in a blog written by TPR's automatic enrolment director, Darren Ryder, which said the regulator would now turn its attention to helping develop a pensions dashboard.

He also said TPR was focused on ensuring schemes are well run through master trust authorisation, taking "quicker and tougher action when trustees are failing to meet our expectations".

"If schemes are not protecting member's benefits then winding up or consolidating may be the next course, and we'll help facilitate that too," Ryder continued.

"So, from the summit of our pensions mountain, we can see how far we've come, but we are also striding with confidence to the next peak to ensure workplace pensions work." 


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This article appeared in our February 2019 issue of The Actuary.
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