Nearly half of U.K. employers offered employees some form of a workplace retirement plan in 2017, up from 19% in 2013, the first year for which statistics are available, according to an annual automatic enrollment report published Tuesday by the U.K. government.
Since the U.K. automatic enrollment legislation was introduced in 2012, more than 9.9 million workers have been enrolled in a defined contribution plan. The report found that by late 2017, 97% of medium-sized, 99% of large employers and 84% of small employers had automatically enrolled employees into defined contribution plans.
Twenty-four percent of plans had a contribution rate of at least 3% in 2017. Some 5.5 million employees enrolled in these plans contributed 4% or more of their earnings. More than 92% of private-sector employees who contributed 3% to 4% of their wages to a DC plan were matched by their employers.
But the report also found that some 5.1 million employees still were contributing below 3%, compared to about 5.9 million employees who were already meeting the 2019 minimum contribution rates in April 2017, according to the government's data. As part of the 2012 legislation, U.K. plans were required to automatically escalate mandatory employee contribution rates to 2% in April 2018 and 3% in April 2019.
Employees enrolled in DC plans collectively saved about £90.3 billion in 2017, up £4.3 billion ($5.4 billion) a year earlier, with public and private sectors accounting for £300 million and £4 billion of the increase, respectively.
"Today's report confirms that auto enrollment is continuing to deliver on its promise of getting millions more people into the savings habit with nearly 10 million people auto enrolled," Adrian Boulding, director of policy at the £600 million multiemployer defined contribution plan, NOW: Pensions, London, said in an email. "The report offers reassuring news that the increase in auto-enrollment minimum contributions in April went off without a hitch with no uptick in people choosing to stop saving, which is very encouraging."
The findings shouldn't lead to complacency, Mr Boulding said, adding that the benefits of auto enrollment need to be extended to as many workers as possible. No amount of savings is too small, he said, which is why the government should "stick to its commitment to extend auto enrollment to 18-year-olds" and not exclude low-wage and part-time workers from contributing to a retirement plan.
