‘Very few’ workers aware of AE contribution changes - DWP

Written by Jack Gray
26/02/2019

“Very few” workers are aware that there will be changes to automatic enrolment contribution levels in April, new research from the Department for Work and Pensions (DWP) has revealed.

It’s interim report - Automatic enrolment: qualitative research with newborn employers – found that, despite not being aware of the increase, workers reaction to the news “tended to be either neutral or positive”.

Some savers expressed concern about not being able to afford the increase, but did not suggest that this could lead to them leaving the scheme.

Employers were broadly positive about the introduction of auto-enrolment, viewing it as a “positive measure” for workers, although some questioned whether the responsibility should fall on smaller employers.

Furthermore, employers found that the overall cost and time involved in implementing auto-enrolment was less than they had expected, and those who were inexperienced in pension administration “tended to feel confident enough about implementing automatic enrolment, to handle everything themselves”.

However, those who did not feel as confident were likely to outsource the task, usually through an ongoing relationship with an intermediary at no extra cost.

Although some employers did not feel confident in implementing auto-enrolment, it was “rare” for employers to seek further information than what they needed to become compliant. This suggests that, despite feeling like auto-enrolment is a positive for their employees, companies are generally not motivated to carry the policy further, and only spent a small amount of time researching potential providers.

The DWP’s report stated that workers did not spend long considering the scheme, and it “was common for workers to describe remaining in the scheme as an easy decision, since they perceived the employer contribution as ’free money’”.

It also found that those who had opted out of the scheme had usually given the decision more thought and that nine of the 12 opt-outs it interviewed were over the age of 50. The most common reason for opting out was that those workers “had already built up – or would have built up by the date they retired – sufficient pension elsewhere”.

The DWP’s interim report “described the experiences” of 43 employers in implementing automatic enrolment, and of 49 workers enrolled by those employers.

The full report is expected to be published “later in 2019” once the final set of interviews have been conducted.

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