Auto Enrolment DWP Research – Average Opt Out Rate 9%

Employers see a lower than expected opt out rate
Only 9% of employees opt out of Auto Enrolment: DWP research

New research by Department for Works and Pensions reveals that over 90% of employees who were automatically enrolled have decided to stay in their companies’ pension schemes. The research reviewed the top 50 employers in the country and the opt out rate is significantly below the figure of 30% that was widely predicted. The research also suggested that more of the under 30 age group were staying in and that the over 50’s were opting out, that is a little bit of a surprise…maybe the pension message is getting through!

The research then further reveals that where a pension was already offered and an employee had to actively join, employee participation nearly doubles. This is great news, the more people save the better their futures will be – if only by a little bit!! So could this be a desire, a need to save for the future

or could it just be apathy…apathy will have a part to play in this, but we think there are other reasons than just apathy. These are the largest 50 firms in the UK, they have the resources, the manpower, access to external consultants and the money to deliver Auto Enrolment and they had to get it right. So what did they do to achieve such a low opt out rate?

Well, we believe this comes down to:

Communications/employee engagement

A large part of the ASDA budget was down to their communication programmes. As another example, McDonalds pulled together its project team in November 2010 (over two years before its staging date) In a WSB article McDonald’s benefits and compensation manager Neal Blackshire’s advice to other employers […]

Capacity crunch – Providers are turning away AE business

“Pension providers have been accused of “misleading” advisers by turning away automatic enrolment business they had previously agreed to accept” according to an article in Money Marketing. 
Disappointing, dishonest, scandalous, shameful, take your pick, but one word we certainly cannot use is “Surprised”.

This time last year Towers Watson released a report “Pension Auto Enrolment – Provider capacity” that stated by the end of 2013 the market would already be running at about 7 times the normal capacity for numbers of employees “placed into a pension scheme”. In 2013 there were around 6000 employers who went through their Auto Enrolment staging date. In 2014 there are around 35,000 employers…. That is around 7 times the capacity requirements again over and above what was required for 2013…

Let’s not stop there (it gets even more exciting!), have a look at the numbers that are going to be staging in the coming years….The tPR has just release forecasted quarterly figures for the coming fiscal years.

So based on an April to March calendar we see the following numbers;

2014/2015  = 32,000 – NB there is a weird drop off from August 2014 – December 2014 we will only see 1,200 companies staging!
2015/2106 = 152,900
2016/2017 = 617,000
2017/2018 = 533,000 

Even if these numbers were evenly spread out through the year, we are still talking about 50,000 schemes EVERY MONTH in 2016/2017. I say “even if” because as we all know they are not spread out through the whole year and on numerous occasions there are over 100,000 companies staging each time.

As I said at the start, it should come as no surprise that capacity was going to be an issue. It should also come as no surprise that providers are “cherry-picking” which scheme they want to load […]

3 Articles You Should Read from Last Week – Ending 24.01.14

Auto Enrolment News – 3 Articles You Should Read
Last week was an interesting one in terms of Auto Enrolment news.  A number of articles were published that really caught the eye and invoked a strong reaction from the team!  Something tells me that there will be follow up to these articles in the shape of more thorough blog posts so watch this space for our opinions on here.

The 3 articles in the firing line are:

Government confirms delay to pension charges cap
Government targets auto-enrol ‘middleware’ in new charges clampdown
Providers ‘misleading’ advisers on auto-enrolment capacity

Do you have any thoughts and opinions on these articles and how they affect Advisers and their clients?  All comments are much appreciated.


Auto Enrolment Predictions for 2014

So there are nearly 10 million people are now in some form of workplace pension, over 2.5 million of those people are due to Auto Enrolment – although it has been suggested by Towers Watson (in an FT Adviser article) that figure could be much higher due to the methodology used to only count employees registered at staging date i.e. it does not count the new recruits to a firm or people who were joined through contractual changes to their employment contract and were “enrolled” before the staging date.

So a few predictions for 2014 – this is based on personal experience and knowledge, please feel free to comment.

Opt out rates will increase

We have seen substantially lower opt out rates than were predicted. Some predictions were around the 30% mark, where we have seen rates at around the 10% mark. While I do not believe we will see 30%, I do think we see a rise to somewhere closer to 15-20% as smaller firm start to Auto Enrol their employees.

This will be because of a number of factors:

Employee engagement will not be as good
Owner manager businesses may not be that positive about Auto Enrolment
No concerns about their brand and social standing/responsibility
Potentially the wrong advice from the wrong people – we have spoken to a number of owner managers who have said “I will tell them what to do, they always listen to me…” (NB yes I know this is inducement, but it will happen!)


Unfortunately there will be some fines this year, with over 30,000 employees due to enrol in 2014 we will see a number of fines handed out. We never had any fines in the first 15 months, but we did see a few notices […]

3 Things You Should Know From Last Week – Ending 10.01.14

Our pick of Auto Enrolment News articles from last week, grab a coffee and take 10 mins to have a read through.

Communication strategies to engage staff with pensions auto-enrolment
Official stats show 2.6m auto-enrolled, 10m in pension
Why compliance holds the key to auto-enrolment success

As always, if these articles raise any questions, drop us a line, we are always happy to discuss things in more detail.

2014 -2015 Earnings triggers are released

The Department for Work and Pensions (DWP) has confirmed today that the earnings trigger for automatic enrolment into a pension scheme will rise to £10,000 from April 2014 – The previous figure was £9,440. There are also changes the lower and upper earnings limits (Qualifying Earnings) upon which auto-enrolment contributions are based have been set at £5,772 and £41,865, respectively. Please see the table for the comparison between this current year and next year.

Incidentally it has been reported that this rise will lead to a further 170,000 people falling under the threshold to be auto enroled, most of these will be part time jobs and 120,000 of the are women.

TAP Assist can help you understand all this, please get in contact if you need more information

4 Things You Should Know From Last Week – Ending 15.11.13

A good mix of articles this week looking at Auto Enrolment from a number of different perspectives.  Interestingly, there is a strong theme suggesting the main underlying problem is still the lack of understanding and education around the whole process.  This is true of both Advisers and employers.  The majority seem to still be underestimating the scale of what is involved, not just to become compliant but to manage the process on an ongoing basis.

Auto Enrolment Orphan’ Numbers Set to Soar As Capacity Crunch Takes its Toll
Five adviser concerns on an auto-enrolment charge cap
Auto-enrolment triggers cash flow concerns for SMEs
Employers would support group risk auto-enrolment

For more articles like these, follow us on Twitter (@tapassistAE) where we like to share updates and content relating to Auto Enrolment on a regular basis.



3 Things You Should Know From Last Week – Ending 13.09.13

Keeping you up to date with the latest Auto Enrolment news and articles, our recommended reading from last week consists of:

FD’s – don’t assume anything about auto enrolment!

Third of workers demand bosses pay for financial advice – research

Auto-enrolment and the under-prepared SME

The messages in these articles would make great content for an email marketing campaign targeting either existing clients or prospects.  Linking it up with a more extensive blog piece of your own and a call to action to schedule a meeting or call would work very well.  This is a simple way of engaging with your clients and prospects, providing them with valuable up to date knowledge in the process.

Auto Enrolment News – 3 Things You Should Know From Last Week – ending 06.09.13

Last week’s Auto Enrolment News articles that caught our eye were:

DWP: ‘Less than 10%’ opting out of auto-enrolment

This continues the trend seen with some of the bigger employers, a figure much lower than originally forecast.  Will we see this kind of rate as we head towards the SME market?

With 90 per cent remaining in auto enrolment pension schemes, unprepared SMEs could be left with a nasty surprise if they don’t act soon…

And finally some examples here from a few Advisers explaining briefly how they charge for Auto Enrolment advice:

This is an area that is of great interest to us and we will shortly be launching an Adviser Workshop series of our own, outlining some simple tips and advice of how Advisers can charge for Auto Enrolment.  The workshops will also highlight where you can outsource certain aspects of the service to add value for themselves and their clients.

Auto Enrolment News – 3 Things You Should Know From Last Week

Our team actively browse the web for interesting and important auto enrolment articles on a daily basis.  Our new feature brings you what we view as the most interesting or note worthy reads of the week.  We know you are busy, let us do the filtering for you.

The majority of what we serve up will be Adviser facing however there will be a good mix of what is important to Employers as they approach their staging dates, perfect information for you to share with your clients or prospects.

Here our our top 3 articles for this week:

PFS: Advisers must grasp ‘huge’ auto-enrol advice opportunity:

‘Micro Firm’ opportunity for Financial Advisers:—-039micro-firm—-039-opportunity-for-financial-advisers-5300.htm

Pension Advisers: ‘Our worst fears are developing’:

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