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Pensions minister: auto-enrolment has been a quiet revolution

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01/10/2013
Pensions minister Steve Webb has hailed pension automatic enrolment "a quiet revolution" and "huge success."

Speaking to Your Money’s sister title, IFAonline.co.uk, to mark one year since the first employees were automatically enrolled into a workplace pension, Webb said the dearth of consumer complaints was one yardstick to measure the scheme’s success.

“What we have done is taken money out of over one million peoples’ pay-packets, essentially without their permission, and overwhelmingly they’ve said thank you,” he said.

“The emotion people experience is relief. People knew it was something they had to do but it was complicated and difficult and they didn’t know how to do it. Now it has been done for them and as a bonus the government and employers are putting money in.”

Some 1.6 million workers have joined workplace pensions in the last year, according to the Department for Work and Pensions.

Webb (pictured) said early signs on opt out were “encouraging”.

Less than 10% of employees automatically enrolled into a pension scheme have so far elected to opt out, according to official figures.

The government had previously forecast that up to a third of workers would opt out.

Auto-enrolment is being staged in over a period of six years, which started with the largest employers in 2012.

Thousands more employers will meet their staging date between now and May 2014.

Meanwhile, a report by NEST and research house the Futures Company said low auto-enrolment opt out rates are one of the most significant examples of how the recession has changed Brits’ money habits.

61% of those surveyed who have yet to be enrolled in a workplace pension scheme said they will definitely or probably opt in, up from just 47% in 2011.

Tim Jones NEST CEO, said: “Many households are still feeling the pinch and people are worried about the future, but they clearly think tomorrow is worth saving for and automatic enrolment seems to be a welcome helping hand.

“Although it can be a struggle to find a few extra pounds each month, the money from employer contributions and relief at finally doing something has convinced more people to stick with saving than we ever expected in this economic climate.”

 

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