Postive reaction from savers to automatic enrolment increase | PLSA
Postive reaction from savers to automatic enrolment increase

Postive reaction from savers to automatic enrolment increase

15 October 2018

Figures released by the PLSA reveal the overwhelming majority of savers have continued to pay into their pension, despite fears they’d be put off by the increase in minimum automatic enrolment contributions earlier this year.

Numbers for the three largest master trusts1 – NEST, NOW: Pensions and The People’s Pension – show the proportion of people who stopped contributing to their pension increased by just 0.2 of a percentage point in the months after April.

Before contributions rose, in the three-month period between January and March, the average proportion of members stopping saving was 3.3%. In the three months after the contribution increase (April – June), the average proportion was 3.5%.

This small rise includes those who decided to stop contributing in that period but will also capture individuals who stopped saving either because they changed jobs or because their employer switched pension provider2. All this suggests the impact of higher contributions on savers’ behaviour has been smaller than anticipated.

Figures from the largest master trusts also show that opt-out rates – the number of people who leave the pension scheme within one month of joining – have remained steady since April. All schemes’ rates stayed at their usual level in the period around the contribution increase, and the average rate for the three master trusts between April and June was 6.2%.

Automatic enrolment has resulted in over 9.88 million eligible people being enrolled into a pension scheme3, and it’s very positive the impact of this contribution increase has been so small. With minimum contributions increasing to 8% from April 2019, the PLSA is urging the industry and Government to continue to work together to help savers understand the benefit of saving into a pension, including the value of employer contributions and tax relief. It’s vital that people continue to save if they are to be able to afford the lifestyle they want in retirement.

Nigel Peaple, Director of Policy & Research at the PLSA said: “Automatic enrolment has been the most successful pensions reform in a generation, resulting in millions more people saving for retirement. It was designed with contributions rising gradually over time to ensure people could afford the payments, and so it’s extremely encouraging people are continuing to save after the first increase. In this case, doing nothing really does pay.

“This year’s increase could mean someone on average earnings ends up with a pension pot of £80,000 instead of £32,000. With small numbers making such a big difference, and many

people saving for the first time, it’s vital industry and Government continue to work together to sustain savers’ confidence in pensions and help people achieve the retirement they want.”

Secretary for State for Work and Pensions, Esther McVey said: “These figures show that automatic enrolment is working and transforming retirement for millions of people. The proportion opting out or ceasing saving remains low as contribution rates increase, helping people save markedly more for their retirement.”



  1. A master trust is an occupational pension scheme used by multiple employers, which provides benefits based on the individual pots of members.
  2. The number who stopped saving are classed as ‘inactive members’. This includes people who chose to stop saving into their scheme, as well as those who moved jobs and are therefore no longer paying in, and employers who chose to move their pension to another scheme.
  3. According to data from The Pensions Regulator.


In assessing the impact phasing has had on savers, the three pension schemes provided information to the Pensions and Lifetime Savings Association on their total number of active and inactive members for each month. These figures have been aggregated and the percentage calculated to help indicate the number of savers who ceased saving in the months following phasing. The percentage was calculated by adding up the total number of active members for each scheme, and the total number of inactive members for each scheme, per month and then dividing the number of inactive members by active members. An average was then calculated for both the period January-March 2018 and the period April-June 2018.

To calculate the average opt-out rate, again the percentage was calculated by using raw numbers from all three master trusts to create an aggregate for each month. An average was then calculated the period April-June 2018.

Financial impact of phasing

If auto enrolment contributions had remained at 2%, a 21 year-old earning £23,000 a year throughout their working life, and who had no previous saving and enrolled from 1 February, could have ended up with a final pension pot worth around £32,000. After the contribution level rose to 5%, the same person would contribute around £8.85 extra a week and could end up with a pension pot worth around £80,000 at retirement. These figures have been calculated using the Money Advice Service calculator and assume a retirement age of 68.

Press contacts


Robyn Margetts, Head of Communications
 020 7601 1726 | 07713 073 023 | [email protected]


Ben Ward, PR Manager
 07881 511845 | [email protected]

NOW: Pensions:

Amy Mankelow, Director of Communications / Cheriton Alexander, PR and Communications Executive
 020 3890 6197 | 020 3890 6199 | [email protected] | [email protected]

The People’s Pension:

Eloise Henderson, Press & Social Media Manager
 01293 205 335 | 07741384 460 | [email protected]

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