Happy 10th birthday , auto-enrolment

Yesterday was deemed to be the 10th anniversary of the start of auto-enrolment. When he announced the staging timetable in 2012, Steve Webb said

Automatic enrolment will begin on time this October, taking up to 10 million people into pension saving, many for the first time ever, and all employers will be part of it.

We have done all we can to ease any burden on business the reforms will bring and employers of all sizes now know the date they need to start enrolling their staff.

The ABI and PLSA celebrated last night with a party

but we should acknowledge that it is businesses and members who are the real heroes.

As this chart shows, the bulk of the staging of auto-enrolment happened in the later years of the staging cycle for employers who see auto-enrolment as a necessary business expense – and not much more


More than 1m businesses have taken on the payment of contributions and compliance with the regulations , more than 10m have not opted out and put their trust in their workplace pensions to give them value for money.

It is the master trusts, supported by the PLSA and the GPPs supported by the ABI who have benefited from this work, I hope last night they raised a glass to those who did their heavy lifting.

Something for Government and the Regulators to be proud of

Pension Ministers new and old were keen to remind us that auto-enrolment is one of their few unqualified policy and regulatory successes.

Guy Opperman retweeted the DWP’s message.

But not everything in the garden is rosy.

The BBC reported on its news feed.

Pension figures reveal cost-of-living impact

Kevin Peachey

Cost of living correspondent

Another sign of the challenges the new prime minister, and relatively new chancellor, face with the rising cost of living has been revealed in data about pensions.

Workers are automatically enrolled into a workplace pension scheme – under a system which has been credited with boosting savings for later life, particularly among younger people. Money is automatically transferred from their pay packet to a pension savings pot.

People can opt-out, but hardly anyone ever has during the 10 years it has been in operation. At the start of this year, 7.6% of newly-enrolled employees dropped out.

Now, that proportion has gone up to 10.4%, according to government figures.

Tom Selby, of investment firm AJ Bell, says that is because some younger people may think that money is better used trying to cope with rising prices and bills, rather than long-term saving. Ministers will be watching the data “nervously”, he says.

Indeed, a poll from the Chartered Institute of Payroll Professionals , earlier in the month, suggests that 32% of the 410 companies who responded, reported a noticeable uptick in opt-outs and pausing of contributions.

Smart, who operate a personalised re-enrolment service which can be used by savers to set the period of pause, have yet to turn this feature on, not yet seeing demand, but its UK CEO, Jamie Fiveash, has told me they are keeping the situation under review.

Small pots are still getting lost

The PPI have done further research on the number of pots which people have lost while saving under auto -enrolment, the PPI’s ‘Briefing Note 134: Lost Pensions; what’s the scale and impact? 2022’  is now available here.

I’ll leave it to PensionBee CEO, Romi Savova,  to comment:

“It’s shocking to learn that the value of lost pension pots in the UK has risen by 37% to reach a total of £26.6 billion since 2018, and that over 2.8 million pension pots are considered to be lost.

While Auto-Enrolment has been successful in encouraging people to save into a pension over the last decade, the impact of a saver getting a new pot each time they start a new job
is clearly taking a toll. This means that people can end up with many tiny pots that they lose track of or become an administrative burden to maintain.

Repaying our debt to the 1m employers and 10m savers

There is no doubt that staging of auto-enrolment was a success. As he considers his retirement, Charles Counsell can look back at TPR’s role with satisfaction, as can the excellent team – now disbanded – who make the staging happen with few hitches.

The master trust assurance framework and the implementation of the OFT recommendations on personal pensions have meant that savers get much better value for money.

We have repaid business and saver’s faith by improving the savings experience

  • Charges are capped
  • Active member discounts have been banned
  • Consultancy charges are banned
  • Cost Transparency has been improved
  • We are beginning to see proper DC performance reporting
  • The interfaces between payroll and providers are now properly automated

In addition we have plans in place to

  • We are  creating standard pathways for the spending (decumulation) of savings
  • We have the opportunity to use the CDC regulations to radically improve overall outcomes
  • Work is in progress to increase the scope of auto-enrolment through the implementation of the “2017 AE reforms”

The challenge ahead

It may take another decade to get to the point where Australia is today, where people are asked to  consider their workplace savings schemes as providing them with pensions. For most of the new 10m savers, pots are neither big enough , nor investment pathways sufficiently developed, for auto-enrolment to have produced more than a capital reservoir to draw from. We need average balances in DC to improve from the current £60k to at least twice that , before our pension pots become a meaningful supplement to people’s state benefits. This chart tells that story

What we have in place is a framework to save which depends on the ongoing co-operation of employers large and small, the confidence of savers and the boldness of Government to finish the job. The job is half done – the debacle in Ireland shows how far head of the game we actually are. But by the comparison with Australia , most of us are nowhere near meeting the Retirement Living Standards , we have  set ourselves- (thanks PLSA).

By 2032, boomers like me will have surged past state pension age and a new generation of savers will be passing the milestones, the minimum normal retirement age, state pension age and most important to them, their target date to stop working. This generation will have less DB pension to support them and look like being more dependent on their pension savings and the state pension. It is vital, for this generation and those behind them, that people like me do not pull up the drawbridge.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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