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Automatic enrolment continues to shape the savings landscape

Ref: PN17-44
Monday 31 July 2017

Thousands of start-up businesses will from October have instant pension duties, and more than half will need to enrol staff into a workplace pension, new figures show.

The Pensions Regulator’s fifth automatic enrolment annual commentary and analysis report (PDF, 1853kb, 37 pages) highlights the success of automatic enrolment (AE) to date. It shows how it will continue to roll out across the UK for more than 700,000 existing employers this year, as well as new businesses in the years to come.

The report contains upper and lower estimates of the numbers of new employers expected to have pension duties until the start of 2020. It shows how TPR predicts that around 73% of all small businesses, and nearly half of micro businesses, will have eligible staff.

The estimates demonstrate how automatic enrolment will continue to reverse the decline in workplace saving. In 2012, 55% of staff were saving into a workplace pension and by 2016 that figure had increased to 78%.

Today’s report shows that by the end of March this year, around seven million staff had been automatically enrolled by around 500,000 employers.

TPR’s Director of Automatic Enrolment Darren Ryder urged anyone setting up a business to make sure they are ready to comply with the law so that their staff receive the pensions they are entitled to.

He said: “Saving for retirement is becoming the social norm and the success of automatic enrolment is playing a key role in this shift. Our figures show that new businesses will continue this trend as they ensure workers are enrolled into a workplace pension.

“Automatic enrolment is now simply part of running a business and from October, as soon as employers take on staff for the first time, they will have duties. More than half of these new businesses will need to set up a pension scheme so that staff can begin saving.

“The job of implementing AE is not complete and we are not complacent. We will be continuing to help steer hundreds of thousands of employers through their workplace pension duties. Those setting up a business should visit our website to find all the information required.”

To help business advisers, TPR has also published expected numbers of employers due to carry out re-enrolment. Re-enrolment must be completed every three years.

Staff must be assessed and those who opted out initially must be put back into a pension scheme. By the end of this year, 12,000 employers are due to have completed re-enrolment.

While compliance with the law remains high, TPR’s report also highlights where TPR has acted to tackle non compliance.

For the first time, a small minority of employers received County Court Judgments for failing to pay their AE fines.

TPR also began employer spot checks across the country to check employers are meeting their duties.

Editor's notes

  1. Other key points in the report include:
    • 393,075 employers completed their declaration of compliance (DOC) between April 2016 and March 2017 - which represents 78% of total declarations to date
    • the percentage of defined contribution schemes used for AE has risen from 93% last year to 97%
    • 96% employers who have completed their DOC said they found ongoing duties easier than expected
  2. Compliance and enforcement activity: 50,068 uses of TPR’s formal powers in 2016-17. This included:
    • 33,716 compliance notices
    • 4 warrants
    • 12,181 fixed penalty notices
    • 187 statutory demands for information
    • 1,193 unpaid contribution notices
    • 2,527 escalating penalty notices
  3. The forecast estimates of the numbers of employers expected to have duties up until 2020 are to manage industry expectations and are presented as upper and lower estimates.
  4. The forecast does not account for future economic factors, threshold changes or the national minimum wage. It also does not account for employer births or deaths as a result of underlying data changes (eg tax rules or internal process changes).
  5. TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).

Press contacts

Ciara Bridge-Butler 01273 662018

pressoffice@thepensionsregulator.gov.uk

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