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27 Jul 2016

More than six million signed up to auto-enrolment

Over six million UK workers have been signed up to automatic workplace pension schemes, the BBC News website reports. However, there are still concerns about just how much money is being saved.

As the publication notes, the most recent stage of the government´s auto-enrolment initiative has witnessed a 95% compliance rate among small business owners. The implementation of the programme has been a gradual process, with 66% of employees now enrolled.

In time, every employer in the UK will have to offer a workplace pension to anyone in their workforce over the age of 22 and earning more than £10,000 per annum.

It is generally accepted that these later stages are the most difficult, as employers who might only have one or two members of staff will have to incorporate a pensions policy into their pay and terms of agreement. This group makes up over a third of those still left to comply with the rules, and covers employees such as plumbers, nannies, carers and bar staff.

The system was launched back in 2012, with the aim of ensuring that workers saved enough money to top up their state pension when they came to retire. It has also had a positive impact on falling workplace pension saving figures.

Although the full rollout is taking years to complete, both pension regulators and MPs have commended the successful take-up by employers and employees alike. Employees can opt out of the saving process, but if they choose to stay enrolled then they must pay in too.

Commenting on the recently announced six-million mark, Charles Counsell - executive director for automatic enrolment at the Pensions Regulator - said that compliance rates to date “have been consistently at the top of our expectations and the savings landscape has been transformed.

However, he did add that “we know the job is not yet done and there are still significant challenges ahead.”

One of these challenges is the concern that not enough money is going into people´s pension pots. Savers may feel that their pension is being taken care of, without checking that the amount being saved is enough to secure the standard of living they expect.

The average contribution from firms is just 3% of an employee´s salary - a figure that ex-pensions minister Steve Webb calls “woefully inadequate to provide a decent retirement”.

Copyright M2 Bespoke 2016

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