Re-enrolment is vital in keeping pension participation rates high

1 March 2019
Pension specialist Helen Morrissey looks at re-enrolment of your employees into a workplace pension scheme.

Auto enrolment has been a great success so far with over 10m1 people enrolled into a workplace pension scheme. Opt out figures remain low at less than 10%2 - this is much lower than initial estimates when auto enrolment began in 2012.

Even this year’s increase in minimum contributions did little to increase employee opt-out numbers. It seems that in the vast majority of cases once people are in the pension they stay in it. This bodes well for April's pension contribution increases.3

However, auto enrolment is not a one-time event and re-enrolment is an important part of the strategy that should not be overlooked.

Decreasing opt-out rates

By carrying out re-enrolment every three years it is hoped that people won’t continue to opt-out either through inertia or because their circumstances have changed. They may now feel they are in a position to start saving towards their retirement.

Last year’s government review on auto-enrolment4 said that:

of workers re-enrolled by a medium sized employer remained in the pension scheme

of workers re-enrolled by a larger sized employer remained in the pension scheme

These figures show that over time re-enrolment has a powerful part to play in increasing your employees’ participation in their workplace pension schemes and so employers should be mindful of their responsibilities in this area.

Re-enrolment is less painful

While initial preparations for auto enrolment might have felt onerous for some employers, the duties around re-enrolment are likely to be much less so.

For a start, the fact that employers have already been through the process before means that they have experience in how it works and they will have learned valuable lessons along the way. There will also be far fewer people that need to be re-enrolled so the experience should be far less painful.

2019 will see re-enrolment playing a vital role in increasing the number of your employees contributing to a pension. Large numbers of employees have already been brought back into their workplace pension scheme through re-enrolment and this figure will continue to grow over time.

Communicating with your employees

We’ll write to your employees who had previously opted out of your workplace pension scheme with information on why they’re being re-enrolled and what it means for them.

To make sure your re-enrolment is succesful in increasing the number of your employees contributing to thier pension, we'll also provide you with a range of communication materials. These will help you to continue to meet your employer duties and communicate re-enrolment with your employees. You can download these by clicking on the images below or request copies  from your Customer Service team.

 

Footnotes

1 The Pensions Regulator, Automatic enrolment, Declaration of compliance report, April 2018

2 Employers’ Pension Provision Survey 2017

Royal London policy paper 29: What will the impact of the April 2019 step-up in automatic enrolment contribution rates 2019 

Automatic enrolment review 2017: analytical report

Last updated: 28 Feb 2019

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