Aegon UK reported a 53% increase in workplace policies being paid up, which the firm said highlighted the risk of members accumulating multiple small pots and demonstrating the need for ongoing member engagement.

Employees still appear to undervalue their workplace pension despite auto-enrolment, the company said.
Analysis by the firm's researchers, based on its auto-enrolment work with 2,300 employers so far, looked beyond opt-out rates.

{desktop}{/desktop}{mobile}{/mobile}

They analysed "the real trends" showing increasingly members stopped paying into their pensions once the opt-out period ended. Angela Seymour-Jackson, managing director of workplace solutions at Aegon, an IFP corporate member, said: "Opt-out rates alone only give you part of the story. There can be a time delay between an employee seeing pension contributions deducted from their earnings, in many cases for the first time, and perhaps deciding they don't wish to or can't afford to make contributions to their employer's workplace pension scheme.

"Our experience indicates an increasing number of members are making their pension policies paid up compared to Aegon's experience before auto-enrolment and also that the trend continues to grow as smaller employers go through auto-enrolment. In turn this behaviour will lead to an increase in the number of small pots that people will begin to accumulate as they move from employer to employer in their careers."

She said: "While auto-enrolment has ultimately meant more people are starting a pension, it doesn't yet seem to have caused a shift in member saving habits and attitudes to long-term saving. Experience from our workplace pension schemes indicates that employees still seem to undervalue their workplace pension."
In the lead up to April Aegon will be launching a new website featuring an income planning tool and lifestyle calculator designed to "encourage employee engagement with their pension planning and provide a better understanding of their options at retirement".