09 August 2016 - Blog
High compliance rates underpin success of automatic enrolment

Automatic enrolment (AE) continues to bring more people into workplace pensions with pension saving again becoming the norm, according to a report published today.

The Pensions Regulator’s (TPR) fourth annual commentary and analysis shows how AE continues to help turn around the historic decline in pension provision. Two thirds of all employees are now active members of a pension scheme, compared with just 47% in 2012.

Compliance rates amongst the first group of small and micro employers to undergo AE are above 95% – demonstrating the effectiveness of TPR’s communications to employers including ‘nudge’ letters and emails, awareness raising with trade associations and business networks, and a national advertising campaign in partnership with DWP.

The majority of employers left to stage (57%) will be micro employers (employing one to four people), and of this subtotal, just over a third (34%) will employ just one person.

A redesigned website, emails and letters were part of a package of communications designed to make it as easy as possible for these employers to comply with the law.

In the report, TPR also updates its forecast of the numbers of employers due to stage in the next two years. There is little change in the number of employers forecast to have workers that they will need to place into a pension scheme. This remains up to 950,000.

However, the overall number of employers expected to have duties has been revised down to between 1.32 million and 1.46 million. This includes employers who will not need to put workers into a pension scheme but will still have other duties, such as declaring compliance, or providing workers with information.

The revision is largely as a result of TPR identifying a large number of single person directors (SPDs) in the summer 2017 stages. The duties do not apply to SPDs, although this may change if they take on other workers.

TPR identified these employers after obtaining access to real-time information (RTI) data from HMRC, and also as a result of direct feedback from employers written to about AE. TPR intends to publish an updated forecast annually.

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 TPR’s functions under Part 3 of the Pensions Act 2004 only).

 

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