Figure could rise as minimum contributions increase to 8% of band earnings from April 2019
Opt-out figures remained low (9%) in 2017, albeit at low contribution levels
Some concern over lack of awareness of specific auto-enrolment rules and low levels of communication
Tom Selby, senior analyst at AJ Bell, comments:
“It is positive that most employers are absorbing the costs of automatic enrolment, although that will be little consolation to those who have already experienced pay restraint as a result of the reforms. Indeed, some workers will face a double whammy as pay increases are held off at the same time as contributing to a workplace pension reduces their take-home pay.
“All this coming at the same time as inflation returns to the UK economy – albeit at relatively low levels historically – means some workers will be left with a difficult choice on whether to stay-in or opt-out of their workplace pension.
“For these people in particular it is crucial communications are good so they are aware of the value of pension saving. In this context the fact only 17% of employers are communicating with employees on an ongoing basis is potentially a cause for concern.
“While auto-enrolment in general has been a success story to date, there are reasons for caution and complacency must be avoided at all costs. The next stage of the reforms needs to focus on boosting engagement levels among employees and encouraging people to save above the minimum.
“Allowing employees to choose where their auto-enrolment contributions are paid – giving people greater control and ownership over their retirement pot - may be part of the solution here, as could schemes such as ‘Save More Tomorrow’ which nudge up contribution levels in line with salary increases.”