Figures in a report released by the Pensions Regulator indicated that by March 2015, over 5.2 million workers had been successfully automatically enrolled since the reforms began in 2012, an increase of more than 2.2 million workers from 2014, and 4.2 million from 2013.

Automatic enrolment is helping to turn around the decade-long decline in pension provision, with 59% of all employees now active members of a pension scheme, compared with just 47% in 2012. This increase suggests that pension saving is now becoming the norm. Saving rates among young people in particular have risen as a result of automatic enrolment, with 54% of eligible 22-29 year olds making regular contributions in 2014, more than double the amount in 2012 (24%).

Again the biggest increase was seen in the private sector (30% increase). The analysis also showed the largest increase in private pension participation, more than doubling from 21% (2012) to 50% (2014) was among eligible employees, those earning between £10,000 and £20,000.

Automatic enrolment has transformed the pensions landscape with the majority of people enrolled into defined contribution (DC) schemes, and with 94% of employers who chose a trust-based scheme opting for a master trust. The Regulator has therefore focused on improving the governance of DC schemes through implementing a code of practice and working with the Institute of Chartered Accountants in England and Wales (ICAEW) to launch the master trust assurance framework.

Automatic enrolment began in October 2012, and is being rolled out in a phased approach so that larger employers had their staging date – which is the date from which an employer’s legal duties begin – before smaller employers. Businesses with over 250 employees had their staging date from 1 October 2012 to 1 February 2014, those with 50 to 249 employees (medium employers) – from 1 April 2014 to 1 April 2015, and small and micro employers began to be subject to their duties from June 2015. New businesses that started up after October 2012 have been given a staging date from 1 May.

Employers must enrol all eligible jobholders into a qualifying pension scheme and make contributions. This applies to workers aged at least 22 but under state pension age, usually working in the UK and earning more than £10,000 per year, unless they are already a member of a pension scheme that meets certain criteria set out in law. A worker who is automatically enrolled into a scheme has the option to opt out of it within one month if they choose.

Employers need to repeat the automatic enrolment process approximately every three years, which is known as re-enrolment. Staff who were automatically enrolled but opted out or ceased active membership more than 12 months before an employer’s re-enrolment date must be automatically re-enrolled into the scheme. Again, they have the choice to opt out. This is to allow them to revisit their initial decision to opt out if, for example, their financial situation has changed.

Contributions are being phased in so that from 1 October 2018 they will increase to 8% of qualifying earnings, of which a minimum of 3% must come from the employer.

The Regulator has a stated aim to educate and enable employers to meet their legal duties through their website but also through a series of targeted direct communications to employers and their advisers, supported by social media and press work and alongside national advertising campaigns. Analysis suggests that these direct communications are playing an important role as the programme is rolled out with awareness reaching 83% among micro employers who received a letter reminding them that they are 12 months away from their staging date.

However, as was demonstrated in the past year, the Regulator will also use enforcement powers to ensure that employers comply with their legal obligations.

The Regulator now expects that significantly more employers will be subject to automatic enrolment duties than originally anticipated, mainly due to an increase in the number of new companies that have started up, and fewer going out of business than was forecast. They have revised the staging profile accordingly, so that it reflects the 1.8 million employers they expect to help through the automatic enrolment process from now until 2018.

Levels of compliance are at the top end of expectations, but the Regulator is aware that the next three years, as the multitude of smaller and new companies come under the regulations, will be challenging. 

Automatic enrolment is helping to turn around the decade-long decline in pension provision, with 59% of all employees now active members of a pension scheme, compared with just 47% in 2012. This increase suggests that pension saving is now becoming the norm. Saving rates among young people in particular have risen as a result of automatic enrolment, with 54% of eligible 22-29 year olds making regular contributions in 2014, more than double the amount in 2012 (24%).

Again the biggest increase was seen in the private sector (30% increase). The analysis also showed the largest increase in private pension participation, more than doubling from 21% (2012) to 50% (2014) was among eligible employees, those earning between £10,000 and £20,000.

Automatic enrolment has transformed the pensions landscape with the majority of people enrolled into defined contribution (DC) schemes, and with 94% of employers who chose a trust-based scheme opting for a master trust. The Regulator has therefore focused on improving the governance of DC schemes through implementing a code of practice and working with the Institute of Chartered Accountants in England and Wales (ICAEW) to launch the master trust assurance framework.

Automatic enrolment began in October 2012, and is being rolled out in a phased approach so that larger employers had their staging date – which is the date from which an employer’s legal duties begin – before smaller employers. Businesses with over 250 employees had their staging date from 1 October 2012 to 1 February 2014, those with 50 to 249 employees (medium employers) – from 1 April 2014 to 1 April 2015, and small and micro employers began to be subject to their duties from June 2015. New businesses that started up after October 2012 have been given a staging date from 1 May.

Employers must enrol all eligible jobholders into a qualifying pension scheme and make contributions. This applies to workers aged at least 22 but under state pension age, usually working in the UK and earning more than £10,000 per year, unless they are already a member of a pension scheme that meets certain criteria set out in law. A worker who is automatically enrolled into a scheme has the option to opt out of it within one month if they choose.

Employers need to repeat the automatic enrolment process approximately every three years, which is known as re-enrolment. Staff who were automatically enrolled but opted out or ceased active membership more than 12 months before an employer’s re-enrolment date must be automatically re-enrolled into the scheme. Again, they have the choice to opt out. This is to allow them to revisit their initial decision to opt out if, for example, their financial situation has changed.

Contributions are being phased in so that from 1 October 2018 they will increase to 8% of qualifying earnings, of which a minimum of 3% must come from the employer.

The Regulator has a stated aim to educate and enable employers to meet their legal duties through their website but also through a series of targeted direct communications to employers and their advisers, supported by social media and press work and alongside national advertising campaigns. Analysis suggests that these direct communications are playing an important role as the programme is rolled out with awareness reaching 83% among micro employers who received a letter reminding them that they are 12 months away from their staging date.

However, as was demonstrated in the past year, the Regulator will also use enforcement powers to ensure that employers comply with their legal obligations.

The Regulator now expects that significantly more employers will be subject to automatic enrolment duties than originally anticipated, mainly due to an increase in the number of new companies that have started up, and fewer going out of business than was forecast. They have revised the staging profile accordingly, so that it reflects the 1.8 million employers they expect to help through the automatic enrolment process from now until 2018.

Levels of compliance are at the top end of expectations, but the Regulator is aware that the next three years, as the multitude of smaller and new companies come under the regulations, will be challenging.