The effect of automatic enrolment on employees working for small employers

The Institute of Fiscal Studies (IFS) conducted auto enrolment research on employees working for small employers (2-29 employees) and has published their findings in the report – The effect of automatic enrolment on employees working for small employers.

The report finds that automatic enrolment substantially increased workplace pension participation among those working for small employers by around 45% to reach 70% of targeted employees – with most, but not all, brought in at relatively low rates of pension saving. This is compared to the participation in largest employers that is around 90%, far higher. The IFS find that this lower participation rate is not explained either by differences in the observed characteristics of workers between smaller and larger employers, or by differences in the pension contributions offered by employers.

Alongside this report the IFS also published some commentary on the findings. This commentary summarises new evidence on the impact automatic enrolment had as it was extended to affect smaller employers. This is important as over a quarter of private sector employees in the UK work for an employer who has fewer than 50 employees and prior to automatic enrolment (in 2012) just one-in-six of these employees were saving for retirement in a workplace pension.


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