Auto-enrolment: experiences so far

Most employers have months, if not years, to go before their auto-enrolment staging date, but many of the UK’s largest employers have already moved to the new regime. Here some of them share their experiences.


  • The auto-enrolment process has brought new responsibilities for employers, for example, regarding the opt-out process.
  • Employers have found auto-enrolment a useful catalyst for re-issuing communication to employees about their pension scheme.
  • Employers that have begun to auto-enrol staff recommend that others allow plenty of time to plan for the process.
Rachel Broughman

Rachel Brougham, head of the auto-enrolment team at Mercer

What challenges have employers faced when preparing for auto-enrolment?
Operational implementation is definitely the hardest part. Timescales are tight and the success of implementation hinges on how good an [employer’s] data is and how effective its payroll is. Employers need to work with payroll to understand the processes and ensure employee data is in the right place and can be assessed.

What tips would you give employers yet to reach their staging dates?
Don’t underestimate the amount of work required and the number of stakeholders across the business that will need to be involved. Pension providers will do a lot, but employers need to have their own house in order, especially in terms of payroll and data, before they can help.

Kevin Doyle

Kevin O’Boyle, head of pensions at BT

What challenges did you face when preparing for auto-enrolment?
Our staging date was 1 November 2012, and although we already offered a pension into which employees were automatically enrolled, and most employees were members, the new regime introduced all sorts of new requirements, such as those around proving that someone has been auto-enrolled and where an employee decides to opt out. All that we had to take into consideration. This has meant making changes to our HR processes and reporting procedures.

What have opt-out rates been like?
Of our 75,000 employees, only about 2,300 employees and a further 5,000 pensioners who are still working for us were not in a company pension scheme. I wrote to them all explaining the auto-enrolment process and I was inundated with emails and calls telling me they didn’t want to be enrolled, but only 450 of the 2,300 employees and 1,500 of the pensioners actually opted out in the end. This was much lower than we had expected. I do think inertia may have had a lot to do with it, but that was the government’s intention when it announced the auto-enrolment regime.

What tips would you give employers that have yet to reach their staging dates?
If you have already got a qualifying pension in place, don’t assume it will be less work. Aligning HR systems can be very time-consuming. If you start from scratch, it might feel like you have more work to do, but it could end up being simpler from an interface perspective. Also make sure employee data is up to date. We have employee self-service to update HR records, but it is amazing how many addresses were found to be incorrect. It can take time to check these details, but it is worth doing because it will save time later on.

Richard Wallis

Richard Wallis, head of pensions at Aviva

What challenges did you face when preparing for auto-enrolment?
The biggest challenge was interpreting the rules and even though we sought advice from consultancy firms, we still ended up with differences in opinion. For instance, there is ambiguity around whether it is necessary for a contribution to be made for the employer to have met its legal requirements when an employee opts out. In the end, we highlighted these areas to the Department for Work and Pensions, so, hopefully, these issues should be sorted out for smaller employers.

What have opt-out rates been like?
We already have a high proportion of staff in our pension scheme and we expect about 99% will be in it once we have gone through the opt-out period. However, we recognise there are some groups of employees we will struggle to get into the scheme. These are young employees, for whom there can be other financial priorities; older employees, who may be close to retirement; and transitory employees who are not really interested in having a pension. We also have some staff who have reached the lifetime allowance limit, so we had to explain to them that they need to opt out to protect their fund.

How did you help employees understand the advantages of auto-enrolment?
We worked with the Aviva employee representative body, Your Forum, and the trade union Unite to help staff understand the issues. Most employees were already members of our pension scheme, but we’ve also been promoting the additional benefits, such as life assurance and income protection, that we offer to everyone who joins the pension to encourage those employees who are being auto-enrolled to stay in the scheme.

What tips would you give employers that have yet to reach their staging dates?
Promote auto-enrolment as a benefit and give employees access to the financial education they need to take advantage of it. The Money Advice Service has some good information and tools and, because it is independent, employees may trust this more than a service provided by their employer. Also bear in mind the benefits to the employer: if employees can’t retire because they don’t have enough of a pension in place, you could end up with a stagnant workforce.

Julian Bailey

Julian Bailey, head of media relations at Morrisons

What challenges did you face when preparing for auto-enrolment?
Our staging date was 1 October 2012 but, because we offer a cash balance scheme, this applies only to new employees and those who move through certain salary bands. We were concerned that a large proportion of employees would not see the benefit of having a pension and would opt out, so we are glad we have until 2017 to roll it out to all staff. This enables us to run an education campaign to highlight the importance of saving for retirement.

What have opt-out rates been like?
Our opt-out rate is around 20% and as this is lower than expected, we are pleased with it. A large proportion of those that opt out are employees who work more for us at busy times of the year. They will have found themselves auto-enrolled as a result of their Christmas pay and many are now opting out.

How did you help employees understand the advantages of auto-enrolment?
We have done a lot to help staff understand the value of saving for retirement. We are working with [personal financial adviser] Alvin Hall and have launched a website to provide financial education and encourage staff to save. It was important to provide this information because there is a risk employees would opt out if they only saw auto-enrolment as a cost.

What tips would you give employers that have yet to reach their staging dates?
Take the opportunity to think about your pension arrangements in general. You will have to comply with the auto-enrolment regulations anyway, so think about what you want your pension benefits to achieve.

Rudi Smith

Rudi Smith, senior consultant at Towers Watson

What have opt-out rates been like so far?
For many large employers, opt-out rates have been lower than expected. Many predicted that about 20% of their eligible staff would opt out, but one employer has seen an opt-out rate of less than 5%. We have also seen opt-ins from employees who are outside auto-enrolment but want to join the pension scheme.

What tips would you give employers yet to reach their staging dates?
Start looking at auto-enrolment now. You need at least 12 months to get everything in place, longer if you need an employee consultation. I also recommend testing your plans and mapping out who is doing what. Some employers have found there is more work than expected or gaps in their preparations. There is also the potential for a logjam of employers preparing for auto-enrolment, resulting in a sellers’ market, where support providers can pick and choose who they work with.