Regulator to start monitoring auto-enrolment exits

Regulator to start monitoring auto-enrolment exits

The Pensions Regulator (TPR) will start to collecting data to ensure it has up-to-date figures on the number of savers leaving auto-enrolment schemes.

This will be the only way of monitoring individuals' responses to the increase in auto-enrolment minimum contributions next April – which will rise from the current 2 per cent to 5 per cent.

One year later, it will increase again to 8 per cent.

Darren Ryder, The Pensions Regulator's director of auto-enrolment, said today (20 March) in a conference organised by the Westminster Business Forum in London that the watchdog is working with the Department for Work & Pensions (DWP) to collect this information.

He said: "We are making sure that we are monitoring that - we will be gathering data from HMRC and through our relationship with some of the main schemes being used for auto-enrolment."

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, published in December.

According to the document, 16 per cent of savers have ceased their contributions.

There are now more than nine million people auto-enrolled in a workplace pension scheme.

Fiona Walker, deputy director at the Department for Work & Pensions, explained that from this total, around two thirds stopped saving due to a change in jobs.

Mr Ryder added: "What this data doesn't say is how many are re-enrolled, something we don't have visibility about and we do want to explore a bit more.”

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 his contributions back, which is monitored by The Pensions Regulator.

FTAdviser recently reported that these savers will be able to lower their pension contribution when minimum rates go up, due to a little known loophole in current legislation.

However, this option will only be available in certain schemes, due to their own rules, and members can lose the employer contributions.