Research published by the Institute for Fiscal Studies (IFS) has found that the automatic-enrolment of employees into workplace pension schemes increased pension saving by £2.5bn (€2.9bn) per year to April 2015 as a result of a large increase in pension membership.

The IFS said auto-enrolment increased pension participation among those eligible by 37 percentage points, so that, by April 2015, 88% of these private sector employees were members of a workplace pension scheme.

Before the advent of auto-enrolment, the figure was around half, and membership had been falling, according to the research institution.  

The research was based on data from April 2011 to April 2015.

Auto-enrolment has been most successful with respect to younger employees, aged 22-29, and relatively low earners, according to the IFS.

It has also had a positive impact in terms of boosting membership of workplace pensions among those not directly targeted by the policy.

Kate Smith, head of pensions at Aegon UK, said there were “some really positive signs auto-enrolment is working” but that contribution rates remained a concern, as even the total of 8% of earnings that the minimum contribution will rise to by April 2019 is “unlikely to be enough for an adequate income for retirement”.

The auto-enrolment policy also fails to capture workers in increasingly common “non-standard working arrangments”, she said, so care needs to be taken to incentivise these workers to save for retirement. 

In other news, Pension Insurance Corporation has priced an issuance of £250m of subordinated debt with an annual coupon of 8% and a maturity of 10 years.

It will use the proceeds to meet expected demand from UK defined benefit pension funds for wholesale insurance annuity products.

CFO Rob Sewell said: “We have had a very successful second half and expect continued significant interest from pension funds for bulk annuities.

“We have taken advantage of a window of market opportunity to bolster our considerable financial resources to be able to meet that increased demand.”