The share of private companies offering their staff workplace pensions has quadrupled in the four years since auto-enrolment, research published by the Department for Work & Pensions (DWP) has shown.
The Employers’ Pension Provision survey, which was carried out by Kantar Public and the National Institute of Economic and Social Research on behalf of the DWP, found two-fifths (41 per cent) of private sector organisations had an open workplace pension scheme to which they were contributing in 2017, employing 87 per cent of all private sector employees.
This was up markedly on 2013, before auto-enrolment was introduced, when 10 per cent of private sector firms had an open workplace pension scheme, with 63 per cent of private sector employees working in these firms.
Overall, 56 per cent of private sector organisations had some form of pension provision for their employees in 2017 but some of those schemes are closed while others attract no employer contribution.
This figure was up 75 per cent on the 32 per cent of firms running workplace pensions back in 2013.
The data means auto-enrolment has reversed the trend found in the decade leading up to the reforms, which saw a decline in the proportion of private sector employers offering pension provision.
Helen Morrissey, personal finance specialist at Royal London, said: “These findings demonstrate the positive impact of auto-enrolment on workplace pension saving.
"There is further cause for celebration in that opt out rates remain consistently low at around the 9 per cent mark – far lower than the industry’s initial predictions at the start of auto-enrolment.”
Nine per cent of employees who were automatically enrolled in the last financial year (2016 to 2017) had decided to opt out, according to the report.
Employers estimated 16 per cent of employees who had been automatically enrolled had ceased active membership, largely because they had left their employer.
On the other hand, in eight per cent of firms non-eligible workers had also been enrolled.
A separate report published by the DWP focused on small and micro employers found young workers were least likely to opt out in those firms, despite many looking to change jobs on a regular basis.
Tom McPhail, head of policy at Hargreaves Lansdown, said: “We have to promote better engagement on the part of employees, encouraging them to take an active interest in their savings; in particular we need to encourage them to think about how much they are saving and where their money is invested.”
David Hearne, director at Satis Asset Management, said auto enrolment appears to have been a huge success for employees but contribution rates, currently set at a minimum of 5 per cent, needed to go up.
He said: “We cannot call auto-enrolment a success yet, but it has certainly made a successful start.
“Investment markets have been broadly positive during the initial stages of auto enrolment, members have seen employer contributions, tax relief and investment growth boost the value of their new pensions.
“We will have to wait and see what impact a market decline might have to opt out rates”