Reaching the incredible milestone of 10 million people newly saving or saving more into a pension is like reaching the summit of a mountain.
Ten million people – equal to the population of Sweden – are now taking the right steps towards being comfortable in retirement.
Working with government, we’ve changed the savings culture. Automatic enrolment is now business as usual for employers and staff can expect a pension as part of their jobs. As a result of automatic enrolment, well above 84% of staff are now saving into a workplace pension. A big thanks to more than 1.4 million employers who did the right thing, and to the pensions industry and adviser community which helped them.
But now that we’ve reached the summit, we should ask ourselves, where do we go from here? Certainly not back down. Being at the top gives us a great vantage point for the way ahead.
We’re now turning our sights to a new summit. Over the past seven years since automatic enrolment began, we’ve heard in our conversations with employees that they’re pleased they have been put into a pension.
We’ve also heard over and over again that they probably wouldn’t have joined a pension themselves. They are glad it was done for them. Now, people are continuing to save and to save more. Inertia has been a powerful factor and in no small part explains the success of automatic enrolment.
But we can’t always rely on inertia. We want people to actively appreciate the benefits and necessity of saving. We want savers to get to know their pension and decide what they’ll need to save to be able to look forward to their retirement.
Increasing engagement and knowledge means giving people easy access to information they need. That’s why we’re committed to supporting government and the industry in creating a pensions dashboard. It will be fantastic to be able to give savers the opportunity to access and understand their pensions savings in the way they now access all their other accounts.
But, as well as helping savers play their part, we are working hard to ensure that where people put their money, stays safe. Most people automatically enrolled are saving into a defined contribution (DC) scheme. Our stats show a 33% increase in DC scheme memberships in 2018, compared to 2017.
That’s why we’re focused on making sure schemes are well run, have rigorous governance and that those running them make the right decisions.
We’re doing that through master trust authorisation and by taking quicker, clearer and tougher action where we find trustees are failing to meet our expectations. If schemes are not protecting member’s benefits then winding up or consolidating may be the next course, and we’ll help facilitate that too.
So, from the summit of our pensions mountain, we can see how far we’ve come, but we are also striding with confidence to the next peak to ensure workplace pensions work.
By Darren Ryder
Director of Automatic Enrolment