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Half a million more small and micro employers will have automatic enrolment duties

Ref: PN15-34
Thursday 23 July 2015

More business start-ups and lower numbers of closures mean around half a million more small and micro employers will have automatic enrolment duties than previously estimated.

The new figures, published today in The Pensions Regulator’s third annual automatic enrolment commentary and analysis, show that a total of around 1.8 million small and micro employers will need to meet their pensions duties over the next three years, compared to the previous estimate of 1.3 million.

The estimates shows the summer of 2017 will see a peak of around 350,000 small and micro employers whose automatic enrolment duties will come into effect (compared to earlier predictions of a peak of around 220,000 in mid-2016).

The report illustrates changes and trends in the pension landscape and that saving for a pension is becoming the norm thanks to automatic enrolment. It shows that most employers are now choosing to use DC pension schemes with a relatively even split between trust-based schemes and contract-based schemes.

Executive director of automatic enrolment Charles Counsell said: “Automatic enrolment has had a dramatic impact on the number of people saving for retirement in the UK – but the new analysis we’ve published today demonstrates that significant challenges still lie ahead. As a result of more new employers starting up and fewer going out of business, the pensions sector will need to plan for larger numbers reaching the start of their duties. Thanks to automatic enrolment, saving for retirement is becoming the norm and we know most employers want to do the right thing by their staff.’

Other key information included in the report:

  • By the end of March 2015, a total of 5.2 million eligible job holders were automatically enrolled. Around 35,000 employers had completed their declaration of compliance between April 2014 and March 2015.
  • 68% and 64% of small and micro employers respectively plan to seek help with automatic enrolment from a business adviser with accountants and IFAs likely to be the most commonly used.
  • 98% of small employers and 94% of micro employers surveyed two to four months before reaching their staging date understood their automatic enrolment duties.
  • From July 2012 to March 2015 around 52% of employers used postponement.
  • In the year to the end of March 2015 we used our formal powers on 2,169 occasions, these included 1,682 compliance notices, 424 fixed penalty notices and 5 escalating penalty notices.

Editor's notes

The Pensions Regulator is the regulator of work-based pension schemes in the UK. We have objectives to: protect members’ benefits; 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 employer’s plans for sustainable growth (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).

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