Almost all of the UK’s largest employers are now complying with the automatic enrolment workplace pensions regime having reached their deadline, and individual opt-outs have proved to be rarer than expected, according to the Pensions Regulator.
In its annual report on auto-enrolment, it said 10,817 employers completed their declaration of compliance between April 2013 and March 2014, and that all large businesses had now passed their staging dates – the deadlines for pension schemes to go live.
This means 99% are now compliant, it said.
Charles Counsell, the regulator’s executive director for automatic enrolment, said: “The past year saw near universal compliance, with many employers actively embracing the changes with innovative communications to ensure their workers understood the benefits of a workplace pension.”
Research among large employers by the Department for Work & Pensions (DWP) found the average opt-out rate of eligible jobholders that were automatically enrolled was 9%.
This was less than anticipated and had prompted the overall auto-enrolment opt-out rate to be revised down to 15% from 30%.
The regulator said the compliance rate achieved was testimony to the success so far of its preventative approach.
“We will continue to undertake proactive compliance drives into identified areas of potential non-compliance,” it said.
In the report, it said there had been 785 potential non-compliance cases referred for investigation during the 12-month period.
However, it noted that what breaches there had been were mainly technical and had been put right after talking to the employer.
Of cases closed in the period, it said 78% had needed no further action because the employer had became compliant shortly after its intervention.
The firms that are now compliant have a total workforce of 15,385,000, of which 3,241,000, or 21%, have been automatically enrolled, the report showed.
The majority of the total workforce – 51% – were already enrolled in an occupational pension scheme, and 25% were not included for a variety of reasons, such as being under 22, above state pension age or not usually working in the UK.
Some 24% of compliant employers said they were using defined benefit (DB) or hybrid schemes for automatic enrolment, and 72% said they were using a defined contribution (DC) scheme.
According to the report, 56% of employers using a DC trust-based scheme opted for a master trust.
Thousands of medium-sized employers are currently reaching their staging dates for auto-enrolment, and small employers, with fewer than 50 workers, are due to automatically enrol their eligible workers next summer.