Despite fears that the increase in minimum automatic enrolment contributions earlier this year would affect the number of people paying into a pension, new research by the Pensions and Lifetime Savings Association have revealed that this was not the case.
The research revealed that in the three-month period between January and March, the average proportion of members stopping saving was 3.3%. In the three months after the contribution increase (April – June), the average proportion was 3.5%. Furthermore, the small rise will also include people who have stopped saving after changing jobs or their employer changing pension provider.
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."
Automatic enrolment has been an undoubted success and has resulted in over nine million eligible people being enrolled into a pension scheme. With contributions increasing again to 8% in 2019, the government and wider pensions industry hope that this will also have very little impact on the number of people saving into a workplace pension.