Auto-enrolment accounts for 28% of workplace pensions

Auto-enrolment accounted for 28% of employees being in a workplace pension scheme by March this year, new figures have shown.

The figure has more than doubled from three years ago, according to analysis by Aviva.

In January 2013, auto-enrolment accounted for 13% of employees being in a workplace pension scheme, the company reported.

The remaining 60% were already in a scheme and 27% were not in workplace pensions (potentially as they were not eligible for auto-enrolment).

The Aviva report stated: “At this early stage in the life of auto-enrolment, the largest employers were implementing the new system. Many of these employers already had mature workplace pension schemes. This diluted the early impact of auto-enrolment.

“As of March 2016, the positive impact of auto-enrolment has more than doubled: rising from 13% in January 2013 to now accounting for 28% of employees being in a workplace pension scheme.”

Over 6 million people have been automatically enrolled into workplace pensions since 2012 and over 100,000 employers have completed their duties.

Since the system was introduced, 10,697 compliance powers have been exercised by The Pensions Regulator – the majority being low-level compliance notices.

The latest figures showed a significant rise in the more significant fixed penalty and escalating penalty notices.

The use of fixed penalties has grown six-fold, from 367 in March 2015 to 2,234. The use of escalating penalties has grown over thirty-fold, from 4 in March 2015 to 127 today, Aviva analysis showed.

Alistair McQueen, savings and retirement manager at Aviva, said: “This data reminds us that it is premature for anyone to declare victory.”

She said: “The need for auto-enrolment to succeed is critical for savers in the UK. It is critical we help more people save more for their retirement.

“Auto-enrolment is a force for good and it is working. More than 6 million people have now been auto-enrolled and its impact is growing.

“There is however no room for complacency, While 110,000 employers have implemented auto-enrolment, there are more than one million employers in the UK so most have still to complete their duties.

“Aviva research shows that smaller employers are feeling the strain. Keeping up with regulation is a number one concern amongst small employers, and data shows a concerning acceleration in the use of penalties.”

Recent Aviva research found that a majority of employers (61%) and employees (62%) continued to support the Government’s decision to introduce auto-enrolment into the workplace – up from 58% and 59% in 2013, respectively.