A new study conducted by Towers Watson, a firm of pension consultants, has revealed that 90% of employees are continuing their membership after being enrolled automatically in a work place pension scheme.
Over the past few years, concern has been mounting that workers are generally not saving enough for retirement. This led to the introduction of the Auto Enrolment, starting in October last year, which now means employers must automatically enrol employees into a work place pension.
Retirement experts had been concerned that despite being automatically enrolled, workers would take the opportunity to opt out of the scheme, reducing their income in retirement. However, the research from Towers Watson, suggests otherwise.
Low Auto Enrolment opt out rates
Last year the Department for Work and Pensions (DWP) conducted a study. This research revealed that around 30% of workers, automatically enrolled, would decide to opt out. However, Towers Watson has found inclusion rates within FTSE 100 companies were “typically exceeding 90%.” This study comes ahead of official figures from the DWP, which are due for release later this year. The yearly study by Towers Watson gathered data from over 90% of FTSE 100 employers and is considered to be the first view on the positive impact of the work place pension scheme changes.
Speaking to the Financial Times, Will Aitken, Senior Consultant at Towers Watson, said: “Take up at this rate is a huge success, It is still early days, with Auto Enrolment still to roll out to midsize and small employers, but the result so far is better than hoped for.”
Auto enrolment will be rolled out over the next few years, starting with large companies such as those in the FTSE100 and finishing off with smaller and new employers in 2018. Financial experts will be hoping the high retention rates seen in larger companies will be mirrored in smaller firms.