Automatic enrolment will reverse the slump in pension saving, with around half of British firms with no pension provision choosing NEST for their workers, claimed Pensions Minister, Steve Webb, as new research shows a drop of 15% in employees’ pension saving.
Only a quarter of private sector employees are active members of their employers’ pension scheme in Britain today (26 per cent), down from a third in 2007 (31 per cent), representing a 15 per cent drop in employees’ pension saving overall.
The research was carried out by the National Institute of Economic and Social Research and TNS-BMRB on behalf of the Department for Work and Pensions and surveyed 3,093 private sector employers of all sizes in Great Britain. It revealed that only 31% of private sector organisations currently offer any pension provision for their staff – down from 41% in 2007.
45% of firms without a current workplace scheme intend to enrol all their employees into NEST, the National Employment Savings Trust. A further 11% say they will set up their own scheme, while 5% say they will use a combination of both.
Pensions Minister, Steve Webb, said:
“Automatic enrolment into workplace pensions will start the monumental shift we need to get millions more people in Britain saving for their retirement.
“NEST is designed around the needs of people who are new to pension saving, with low charges, costs and easy to use services. We expect around half of all new savers to be NEST members, including many low-paid and part-time workers, women and young people, who will get a contribution from their employer for the first time.”
Most firms who already offer some form of workplace provision plan to keep all current members of their largest or only scheme in their existing scheme (60%). 6% plan to enrol all current members in to NEST. Half of employers say they will use their existing scheme for all non-members and new employees, and 19% would enrol all non-members and new employees into NEST.