Early data from large employers that were among the first to auto-enrol all eligible employees into a workplace pension scheme indicates that opt-out rates have been lower than expected.
Before the auto-enrolment roll-out began last October, it was predicted employers could expect opt-out rates of 20% to 30%.
But McDonald’s Restaurants, for example, has seen only 2.4% of its hourly-paid employees and 2.7% of its salaried staff that were auto-enrolled on 1 January 2013 opt out.
The fast-food retailer has 37,000 directly-employed staff in the UK. Of these, 35,000 are hourly-paid and 2,000 are salaried. Among its salaried workers, 900 were already members of its stakeholder defined contribution (DC) scheme. A further 1,100 salaried staff were auto-enrolled into this plan and more than 9,589 hourly-paid employees were auto-enrolled into the National Employment Savings Trust (Nest).
Meanwhile, insurer Aviva has seen 127 of the 332 staff that were auto-enrolled on 1 February opt out. Some 17,542 (99%) of its staff already belonged to a DC trust-based plan.
Rob Thomas, an associate in the employee benefits division of Barnett Waddingham, said: “Larger organisations that have gone through staging have put a lot of work into communicating auto-enrolment and have had very well-structured schemes,” he said. “However, it is possible that when we get to stages two and three of auto-enrolment, there will be high opt-out rates.”
But not all employers have seen low opt-out rates. John Taylor, managing director of Nest’s customer and proposition team, said: “In general, our opt-out rates are below 10%, but some employers that are using Nest have high opt-out rates.
“When employees go through the quick opt-out process, they come across information explaining that employers are in it for the long run and that gives them pause for thought.”