A spokesperson at Legal & General believes the industry is well-positioned to cope. “We undertook a communications exercise to remind employers of their duties and provided them with sample communications to issue to their employees on the benefits of contributing towards their workplace pension.
“The April 2018 increases have not led to a rise in opt-outs or cessation, and we are not expecting this to change next year.”
Our own data paints more of a mixed picture (see table 2), with opt-out rates increasing for the likes of Aviva (from 7.3 per cent to 9.9 per cent) and Now: Pensions (from 5 per cent to 9.4 per cent).
But other data is more reassuring. Nest, still by far the largest workplace pensions provider, has seen its opt-out rate fall 0.5 per cent to 7.5 per cent and the People's Pension has witnessed a drop of 0.9 per cent to 4 per cent.
This year we also asked companies to break down their opt-out rates by age for the first time. The figures here are positive: rates for those aged 22-35 are actually lower than the overall proportions in all cases, suggesting younger workers are not being forced to prioritise current expenditure at the expense of workplace pensions. The statistics also raise a question about the extent to which opt-out levels are being driven by older members who may feel they have already saved enough in their pots.
Dale Critchley, policy manager at Aviva Workplace Benefits and Retirement, says the firm remains positive on the overall participation picture.
He says: “Cessation rates and opt-out rates for members were not impacted by the increase in 2018. The impact of the 2018 rises on take-home pay was cushioned by increases in the National Living Wage and in the tax-free personal allowance. Given the announcement of similar rises in the budget, we think participation rates will remain as they are post the 2019 increases.”
But other obstacles remain, not least that being auto-enrolled does not necessarily equate to being engaged. Worryingly, data from the Office for National Statistics in its Wealth and Assets Survey found that although 91 per cent of employees have now joined a pension scheme, less than two-thirds (63 per cent) are aware they have been enrolled.
This is coupled with the accepted view that sticking to the minimum contribution limits is unlikely to yield a sufficient fund size to meet an individual’s retirement income needs.
