Automatic enrolment  

Auto-enrolment set to pass 1m employer mark

Auto-enrolment set to pass 1m employer mark

The number of employers to have complied with auto-enrolment is set to reach a milestone in February, passing the 1m mark.

The latest data available from The Pension Regulator (TPR) shows this number stood at 983,446 employers in December, and as the deadline for the last companies to join auto-enrolment approaches, the figure is expected to grow even further.

Government-backed workplace pension scheme National Employment Savings Trust (Nest), for example, was processing up to 1,500 new employers a day in December, as the staging process ended on 1 February.

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In the beginning of 2017, Nest estimated that around 700,000 small and micro-businesses would stage during the year. 

Tom McPhail, head of policy at Hargreaves Lansdown, said auto-enrolment has been "remarkably successful, so far".

He said: "Everyone involved deserves credit, the politicians, the pension companies and the 1m employers who have actually set up pensions for their employees and who are now helping them save for retirement."

There are now more than nine million people auto-enrolled in a workplace pension scheme, according to figures from TPR.

From April 2018, the auto-enrolment minimum total contribution will increase to 5 per cent, with the employee paying 3 per cent.

One year later, it will increase again to 8 per cent, with the worker paying 5 per cent.

A total of £17bn a year will be going into workplace pensions by 2019 to 2020 because of auto-enrolment.

But Mr McPhail said there was still more work to be done.

He said: "We need to keep working on membership numbers, on contribution rates and on member engagement.

"In particular, the rules should be developed to give individuals the freedom to choose their own pension provider, rather than being forced to accept the scheme chosen for them by their employer.

"This would improve engagement, strengthen competition and cut down on the number of small pension pots. It would be possible to do this while keeping all the default auto-enrolment systems in place, so giving employees the best of both worlds; defaults for the disengaged and choice for those who want it."

The Department for Work & Pensions published its review of auto-enrolment in December, where it announced that the minimum age for workers to be included into workplace pension schemes will be reduced from 22 to 18-years-old, and it will change the way pension contributions are calculated by the mid-2020s.