More than 2m workers have begun saving into a workplace pensions scheme as a result of automatic enrolment but 3m are missing out on auto enrolment for a variety of reasons.
According to figures released by The Pensions Regulator automatic enrolment, which began in October 2012 now covers more than 3,500 employers who have joined the workplace pensions scheme designed to encourage more employees to join a pension scheme.
Hundreds of staff at the charity the British Heart Foundation are the latest to automatically enrolled, helping push the figure past the two million landmark, says The Pensions Regulator.
Pensions Minister Steve Webb said: "It is great news 2 million people are making a positive difference to their retirement prospects through automatic enrolment. The changes to workplace pensions will help millions more people to achieve many happy new years in the future.
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The new year will see a new stage in the roll-out programme as more employers are covered with tens of thousands of medium-sized employers introducing automatic enrolment. The Pensions Regulator is urging all employers to make sure they know when they must introduce the changes, or 'stage'.
Charles Counsell, executive director of automatic enrolment at The Pensions Regulator said: "If they have not done it already I would hope the first thing every employer does when they get back to work after the Christmas break is to check their staging date and prepare for automatic enrolment."
However, many people covered by auto-enrolled employers are not joining up for a variety of reasons. Some of the reasons are to do with the way the scheme operates, says pension and investment adviser Hargreaves Lansdown.
Hargreaves says that while 2 million employees have now been auto-enrolled into a workplace pension, the latest report by The Pensions Regulator also shows that 3 million workers have not been auto-enrolled into a workplace pensions. These are minly workers who are too young, too old or don't earn enough to qualify to be automatically enrolled.
Laith Khalaf, head of corporate research at HL, said: "'It is extremely positive that two million people are now saving into a pension who were not before. Employers, advisers and providers need to build on this and help these workers to understand if they are saving enough and how to make the most of their pension. Without this next vital step, the risk is we create a nation of pension zombies who fall off the savings wagon at the first bump in the road.
"The Regulator's figures also show that 3 million workers have been left behind by auto-enrolment to date. Many of these workers cannot afford to save; however some can, particularly those who have several part-time jobs, or those part-time workers with higher earning spouses. Again communicating the need to save and the benefit of an employer pension contribution can encourage opt-ins from those who could and should be saving."
HL says that the number of companies auto-enrolling is beginning to expand "exponentially" and the true test for auto-enrolment will lie in 2014 and beyond. Employers have the difficult task of complying with the regulations, at a time when there will be unprecedented demand for the services of pension providers and advisers.
Laith Khalaf added: "Throw into the mix the fact that the government is still pondering the final rules, including a price cap, and 2014 has the potential to plunge the auto-enrolment programme into mayhem."
The Pensions Regulator has confirmed that 3,670 companies have so far auto-enrolled. However over 4,000 companies will auto-enrol in just January and February of next year alone which may create a "capacity crunch" in 2014.