Skip to main content

You are here


How UK’s Auto-Enrollment Pension Scheme is Doing 10 Years Later

DC Plan Design

A decade after implementing Britain’s auto-enrolled pension system shows an increase in total savings, and many employers are going beyond stipulated minimum contribution rates. 

“However, challenges remain for the coming decade, including ongoing participation deficits for self-employed workers, multiple job holders, and some demographic groups,” Calum Kennedy wrote last week at London Economics

The biggest success came from increasing overall workplace pension enrollment rates. 

“Since the scheme’s inception, over 10.6 million workers have been enrolled into a workplace pension, meeting targets set out by the Pensions Commission in 2006,” Kennedy added, citing Department for Work and Pensions data. “Most of these gains have been accrued in the private sector, which has typically been characterized by lower enrollment rates than the public sector.”

The UK government implemented the auto-enrollment feature in 2012 after passing the Pensions Act in 2008, and it celebrated its 10th anniversary last October.

As Kennedy noted, “every UK employer must register eligible employees (aged between 22 and state pension age and earning over £10,000 per year) into a workplace pension. AE was phased in between 2012 and 2017, starting with the largest employers. Since 2018, all UK businesses have had to provide a workplace pension to new employees.”

Enrollment rates among eligible employees in the private sector have more than doubled, from 42% to 86%, and as a result, private sector workplace pension enrollment rates now almost match those in the public sector.

“There has also been a convergence in enrollment rates across incomes, age groups, and occupations,” he concluded. “In 2012, the gap in enrolment between those on the highest incomes (more than £60,000 per annum) and the lowest incomes (between £10,000-£20,000 per annum) was 49%. Less than one-third of the lowest-income employees were enrolled in a workplace pension, as opposed to 81% of the highest-income employees. By 2021, the enrolment gap had fallen to 11%.”