Around 8.5 million people could become new pension savers by 2030 if auto-enrolment opt-out rates remain around 9-10%, according to research by the Pensions Policy Institute (PPI).
The report, How will automatic enrolment affect pension saving?, which was sponsored by Legal and General, analysed data provided by auto-enrolment pension scheme providers and consultants, as well as the Department for Work and Pensions.
Using various auto-enrolment opt-out scenarios, the PPI estimates that there might only be 6.5 million new pension savers in 2030 if opt-out rates rise to 25%, and that the value of assets in private sector defined contribution (DC) workplace pension schemes could range from between £455 billion to £495 billion, in 2014 earnings terms, compared with around £350 billion without auto-enrolment.
The report also found that the value of total private sector workplace DC assets in the UK could become greater than the total value of private sector workplace defined benefit assets by around 2036.
Daniela Silcock (pictured), senior policy researcher at the Pensions Policy Institute, said: “This research shows that DC pensions will play a much greater role in private sector pension saving in future, though the decisions made by employers and employees will affect the total scale of saving and the value of assets in schemes.
“The current opt-out rate of 9-10% has exceeded expectations. However, it is worth reflecting that larger employers, which are more likely to have existing provision and extensive HR and administration support structures around pension saving, have just completed their [auto-enrolment] staging dates.
“Small to medium-sized employers will be reaching their staging dates over the next few years, and it will be important that these employers are given the support necessary to fulfil their duties and that employees for whom pension saving might be beneficial are not encouraged to opt out.”