Auto-enrolment has been an “extraordinary success”, the government has said, as a new report shows that small business workers have benefited significantly from the reforms.
A study by the Institute for Fiscal Studies shows that almost half of the country’s small business workforce has now been placed into a workplace pension, representing a 44 percentage point increase in the participation rate.
The IFS estimates that the number of small business employees saving into a workplace pension would have been around one in four without auto-enrolment, but this has now reached seven in 10, up from one in six before the advent of auto-enrolment in 2012.
Around a quarter of private sector workers in the UK are employed by a small business.
Pensions minister Guy Opperman says: “Automatic enrolment has been an extraordinary success, transforming pension saving and improving the retirement prospects of more than 10 million workers already.
“As this report shows, small business owners all over the UK have made this possible, with participation rates estimated to have been increased from 26 per cent to 70 per cent due to automatic enrolment. This radical reform is creating a new relationship between the employee and their employer.”
Royal London pension specialist Helen Morrissey says: “Today’s data shows the enormous success auto-enrolment has had in getting Britain saving for retirement. It is also positive to see employers getting the support they need with 70 per cent of small and micro employers saying they found the ongoing administration of their scheme easy.
“We now need to build on this success by widening the scope of auto-enrolment so that it includes the self-employed – a group that have up until now been underserved by pensions.”