The Department for Work & Pensions (DWP) will look at a re-enrolment into pensions policy, if the current measures are insufficient to stop savers from leaving their auto-enrolment schemes.
Auto-enrolment minimum contribution rates will increase next April from the current 2 per cent 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.
There has been speculation around how people will react to these increases, with research pointing out that some groups are more likely to stop saving into their pension, such as women and millennials.
Fiona Walker, automatic enrolment programme director at the DWP, said today (20 March) in a conference organised by the Westminster Business Forum in London that individuals stopping contributions is a scenario that the DWP anticipated as a possibility.
This is why she said the government designed re-enrolment - people will go back into saving either when they move job or every three years if they stay with the same employer.
She said: “That is the fundamental policy design that should allow us to maintain high participation rates, even if we see an initial effect as a result of contribution increases.
"I don't have any reason to believe that wouldn't be an effective approach, but if the evidence show us something different we can look at that again."
The only data regarding cessation rates – when members decide to stop saving and leave their scheme – was published in the government's auto-enrolment review, announced in December.
According to the document, 16 per cent of savers have ceased their contributions.
The Pensions Regulator announced earlier today (20 March) that it will start collecting data on cessation rates to ensure it has up-to-date figures on the number of savers leaving auto-enrolment schemes.
According to Ms Walker, it is important to disclose this data.
She said: "There has long been a rumour, that something was going on with cessation [rates], that meant that the low opt-out rate was masking something different.
"It was really useful to establish in the 2017 review last year that was in fact not the case."
Cessation data is different from opting-out, a six-week window when a member is first auto-enrolled in the scheme and has the choice to leave and get all their contributions back.
This data is already monitored by The Pensions Regulator.