NAPF: Young opt-ins biggest auto-enrolment surprise
Employees too young to be auto-enrolled have been a notable group opting in to workplace saving, the National Association of Pension Funds has reported, calling it one of the most interesting aspects of auto-enrolment so far.
Feedback from the association's membership showed opt-ins were much higher than expected and generally not from employees earning too little to be able to save, but from those below 22 – the age of eligibility for the reform.
"Interestingly, some of the responses from the young people were that the reason they are [opting in] now is because they won’t be able to afford to do it as much later," said Helen Forrest, head of policy and advocacy at the NAPF, which represents 1,300 pension schemes and 400 providers.
Speaking at a roundtable discussion hosted by consultancy Barnett Waddingham yesterday, she said the feedback from members was an intriguing early result of workplace pension reform.
“There is an element of ‘I know I have got more disposable income now because I don’t have a mortgage and I don’t have the other [financial burdens],’” Forrest added.
Since the reform kicked off in October at large employers, a steady stream of low opt-out rates have been confirmed, with John Lewis reporting an initial 5 per cent rate and Asda recording 8 per cent.
Video: Mastertrust chiefs debate capacity and opt-ins
The three main mastertrust providers - The People’s Pension, the National Employment Savings Trust and Now Pensions – have put early indications of opt-outs at around 10 per cent.
"We are also seeing a few entitled workers opting in, which is very positive [and] a bit suprising," said Morten Nilsson, Now Pensions' chief executive officer, earlier this year (see video above).
Nest has revealed applications for slightly more than 1,000 opt-ins by the end of March, but a spokesperson could not give a demographic breakdown.