Consistent with other populations, automatic enrolment opt-out rates among employees of small and micro employers are low, with 85% of members remaining in their pensions, according to a report by the Department for Work and Pensions (DWP).
The report, Automatic enrolment: quantitative research with small and micro employers, which was published on 20 June 2018, also revealed that 81% of small employers agree that workplace pensions are a good thing.
The DWP’s report further found:
- 65% of small and micro employers feel that it is their responsibility to encourage staff not to opt out of their pensions; however, only 54% state that that they have a duty to ensure staff are able to manage financially in retirement.
- Those most likely to opt out within micro organisations are part-time workers (27%) and older employees (28% of those aged 50 to 59).
- 70% of employer respondents believe the ongoing administration of their workplace pension scheme or schemes is easy to cope with. Two-thirds (64%) said they faced ongoing costs for administering their workplace pension scheme, but extra time commitments tended to be low, with 72% spending less than half a day a month on these duties.
Tom McPhail, head of policy at Hargreaves Lansdown, said: “Auto-enrolment is working well. Even among the most challenging sector of the employer community, the very small businesses, there’s good support for the policy, the administration isn’t too much of a burden and the employees are staying in their pensions. So far so good.
“There are two big challenges to face next. Firstly, we have to put employees in control of their own retirement savings, rather than forcing them to switch to a new pension every time they change jobs. This aspect of the system is madness and runs against the grain of the way people manage their finances. Secondly, 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.”