According to new research released by the Pensions and Lifetime Savings Association (PLSA), the overwhelming majority of savers have continued to pay into their pension despite there being fears that people may be put off by the minimum increase in contributions.
The research shows that the number of people who stopped contributing to their pension increased by just 0.2% in the months after April. The small rise will also include those people who have stopped saving because they have changed employers or because their employer switched pension provider. Overall, this suggests that the impact of higher contributions on savers' behaviour has been minimal.
Automatic enrolment has resulted in nearly 10 million eligible people being enrolled into a workplace pension. But with minimum contributions increasing to 8% from April 2019, the Pensions and Lifetime Savings Association is calling on the industry and government to continue to work together to help savers understand the benefits of saving into a pension.
Nigel Peaple, Director of Policy & Research at the PLSA said: "Automatic enrolment has been the most successful pensions reform in a generation, resulting in millions more people saving for retirement. It was designed with contributions rising gradually over time to ensure people could afford the payments, and so it's extremely encouraging people are continuing to save after the first increase. In this case, doing nothing really does pay."
"This year's increase could mean someone on average earnings ends up with a pension pot of £80,000 instead of £32,000. With small numbers making such a big difference, and many people saving for the first time, it's vital industry and Government continue to work together to sustain savers' confidence in pensions and help people achieve the retirement they want."
Secretary for State for Work and Pensions, Esther McVey also commented on the research:
"These figures show that automatic enrolment is working and transforming retirement for millions of people. The proportion opting out or ceasing saving remains low as contribution rates increase, helping people save markedly more for their retirement."