Over a million employers place staff in pensions under landmark savings drive

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More than one million employers have now enrolled their staff into a workplace pension, new figures show.

Since automatic enrolment was launched in 2012, there have been staging dates bringing employers, and their staff with them, into pensions, starting with the UK's biggest firms and gradually filtering out to small employers.

As of January, 1,032,567 employers had met their duties.

The Pensions Regulator (TPR), which released the figures, said the scheme has led to around 9.3 million people so far saving into a pension.

TPR's director of automatic enrolment, Darren Ryder, said: "By successfully meeting their responsibilities, employers have helped reverse the downward trend in workplace saving so that putting earnings into a pension has now become the norm."

Currently, to be automatically enrolled into a workplace pension, employees must be aged 22-to-state pension age and earn at least £10,000 per year.

In return for employees contributing a minimum of 1% of their pay, employers will at least match it, with most savers also benefiting from tax relief on their contributions.

The scheme has so far been seen as a success, with around nine in 10 people staying in their pension.

However, challenges lie ahead - including helping make sure people save enough for a comfortable retirement rather than just putting aside the minimum.

Minimum contribution rates are set to increase to 5% including staff and employers' contributions in April, and then to 8% including staff and employers' contributions in April 2019.

Guy Opperman, Minister for Pensions and Financial Inclusion, said: "With one million employers - from the small sandwich shop owner to the large supermarket chain - now enrolling their staff into a workplace pension, we are creating a nation of responsible employers who are reassuring their workforce that with their support, they will have a secure retirement."

Tom McPhail, head of policy at Hargreaves Lansdown, said: "Auto-enrolment has been a remarkable achievement, but there is still time for defeat to be snatched from the jaws of victory.

"Contribution rates are about to start rising, which means individuals need to be persuaded of the value and importance of staying in a pension and making the most of their employer's contributions."

Sir Steve Webb, director of policy at Royal London, described the announcement as a "huge milestone".

He continued: "But now the real work starts. The step up in contributions in April 2018 and April 2019 has to be handled well and we urgently need a plan to get people beyond the 8% minimum contribution planned under existing legislation.

"Getting so many people started with pensions is a tremendous achievement, but they risk being disappointed with the outcome if we do not get those savings levels up to more realistic levels as quickly as possible."

In December the Government released its review of automatic enrolment, announcing proposals including helping younger people, lower earners and multiple job holders to get on the path to a more financially secure retirement. It plans to introduce the reforms in the mid-2020s, after the contribution increases in 2018 and 2019 will have taken effect.


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