Fewer than 10 per cent of UK workers have opted out of pension schemes after being automatically enrolled, official Department for Work and Pensions figures have revealed.
A DWP survey of 50 of the UK’s biggest employers found that just nine per cent – 41,400 – of eligible workers opted out of retirement savings in the month after they were automatically placed in pensions.
In contrast, 418,600 chose to stay enrolled.
Pensions minister Steve Webb has said this bodes well for the landmark government programme, which will continue to be rolled out over the next five years.
He said: ‘Seeing our largest employers report such low opt out rates bodes well for this ambitious programme, which will see millions more putting money aside for the future.
‘Too few people have been saving for retirement. It is all too often something to be put off, something for tomorrow.
“These figures show that people really value the chance to save into a workplace pension as they know they will also get money from their employer and the taxman too.
“The sooner people start a pension the better, and this report shows that young people are keen to take charge and plan for their future.”
The figures are certainly encouraging – and goes against the pre-automatic enrolment research, which suggested that opt-out rates might be as high as 30 per cent.
The low opt-out means the vast majority of workers have chosen to forego some take home pay in order to save into a pension.
At the start of the scheme workers pay one per cent of their salary into a pension and this is matched by their employer. This will grow in the years to come, until, in 2018, workers will pay in a minimum of 4 per cent of their pay, with 3 per cent coming from employers and a further 1 per cent from tax relief.
It is still early days for the project, and the opt-out rate is likely to increase as more small and medium-sized businesses begin auto-enrolling staff over the next five years.
Major companies that have started auto-enrolling employees since its launch last October have included McDonald’s, BT, John Lewis and Asda.
Of the employers that provided data to the DWP, 61 per cent of their staff were already members of a workplace pension scheme, while 24 per cent were auto-enrolled. The rest were ineligible, or on the payroll but not working.
Not surprisingly, those in the 50-plus age group had the highest opt-out rates with 15 per cent choosing to leave their auto-enrolled pension, while under 30s had the lowest rate, with just 8 per cent opting out.
Anyone who is auto-enrolled is given a month to opt-out.
The Pensions Regulator revealed recently that more than a million workers have been automatically enrolled since October, but concern has been expressed that some 1.7 million other workers have missed out because they are not eligible.
While this includes those who are above the state pension age or under 22 – who are not eligible under auto-enrolment rules – it also includes thousands of part-time workers who do not earn enough to be enrolled.
This has given rise to concern that millions of workers will be left without private pension savings when they come to retire.