AE hits 8m but late stager numbers soar

More than 8 million employees have signed up for a workplace pension since the launch of automatic enrolment, but the proportion of employers missing their staging date is soaring, new figures show.

The Pensions Regulator’s latest declaration of compliance report shows the number of employees auto-enrolled has passed the 8 million mark, though 7 million have not been enrolled because they do not meet the qualifying criteria.

Figures from Aviva show 18 per cent of businesses applying to the provider missed their staging date, risking a fine from the regulator. Just over a year earlier, in Q1 of 2016, only 1 per cent of employers approaching Aviva had passed their staging date.

The proportion of companies sorting out their auto-enrolment obligations more than two months in advance has seen fallen steeply, from a high of 40 per cent of applicants 12 months ago to just 19 per cent in Q2 2017, says Aviva.

From October this year the rules around setting up a workplace pension are changing, with any new company starting up having to set up its workplace pension as soon as it takes on an employee.

During June 2017, 168,000 people gained workplace pensions because of automatic enrolment – the equivalent of almost one every 15 seconds. This came as 44,328 more UK employers declared that they had completed their workplace pension responsibilities, bringing the total number of employers who have done so to 642,454.

Minister for Pensions and Financial Inclusion Guy Opperman says: “Reaching this eight million figure is a formidable achievement and represents a huge number of people on the path to a more financially secure retirement.

“But we cannot be complacent and as contribution rates rise we know there is more to be done. That’s why our automatic enrolment review, which will report back later this year, is so vital to the future of this life-changing policy.”

TPR director of automatic enrolment Darren Ryder says: “Tens of thousands more people every week are signing up to a new workplace pension through automatic enrolment. Employers are continuing to become compliant and to remain so, allowing their staff to get the pensions they are entitled to.

“There are more than 500,000 more employers whose duties are still to begin over the coming months. I would urge each and every one of them to check today that they know what they need to do and when they need to do it so they can seek our help if they need it.”

Aviva managing director of business solutions Andy Beswick says: “Auto-enrolment has been running for five years and been a great success so far in getting more people saving for their retirement. But our data shows that as we move towards smaller businesses needing to set up auto enrolment pensions, more employers are struggling to prioritise their workplace pension.

“These companies don’t tend to be blessed with big HR departments or benefits consultants and therefore have to do it themselves, alongside the accounting, the payroll, the admin and actually growing their business and making it successful.

“If there are employers who have been putting it off, now is the time to take action.”

Barnett Waddingham associate Rob Thomas says: “With many employers adopting the minimum earning thresholds and age restrictions allowed under the AE regulations, the same source of statistics reveal over 7million have not been automatically enrolled into a workplace pension scheme and more could be done to encourage them to join. The barriers, which prevent the 7million from benefitting in the same way as those already enrolled in workplace schemes, needs investigating.

“There are also several hundred thousand micro employers who have not yet established their workplace saving pension schemes. We could see the number of people not eligible to join, or opting not to join, worsening the number of employees who sit outside their employers’ workplace pension schemes.

“We should also be mindful that there is a growing number of self-employed workers, zero-hour contractors and flexible workers who fall outside of the auto-enrolment regulations. While it is worth a pause to give everyone a pat on the back for reaching the 8million milestone, we should not be complacent to think the job is complete.”