National Employment Savings Trust, London, saw its opt-out rate increase to 9.5% from 6.3% following the 2019 mandatory escalation of retirement plan contributions in the U.K.
A report published by NEST Insight, the plan's research unit, found that following the escalation of mandatory employee and employer contributions to a combined 8% by the U.K. government from a combined 5% in 2018, opt-out levels remain far below initial forecasts.
When auto-enrollment was introduced in 2012, policymakers estimated that opt-out rates could reach 30% when contribution rates increased in 2018 and 2019.
The opt-out rate was 5.8% prior to the first mandatory escalation of contributions in 2018, when the combined employer and employee contribution rate increased to 5% from a combined 2% rate. At that time, NEST had only 4.5 million participants, according to its April 2017 records, compared to 9 million participants in June 2020.
"Auto-enrollment has revolutionized the U.K. pension system, helping over 10 million people start saving for retirement," Matthew Blakstad, analysis director at Nest Insight, said in a news release. "Once again, our in-depth analysis of member behavior following the increase reveals that opt-out and cessation rates have remained very low. This is a real testament to the policy's design, which has gradually eased people into the 'savings habit.'"
In the report, "How the U.K. Saves: Effects of the second savings rate increase," NEST Insight and its research partner, Vanguard, also found that plan participants were less likely to cease contributing the longer they've been enrolled into one plan.
NEST had £9.5 billion ($11.7 billion) in assets as of March 31.