Over 50s leading early auto-enrolment opt-outs

Its figures are based on a handful of large clients – companies that have auto-enrolled several hundred thousand employees in the past few months.

The average opt-out rate for these is just below 10 per cent, according to Adrian Boulding, pensions strategy director. But opt-outs for those over 50 were markedly higher.

“It could be that these are pretty hard-bitten people,” he said. “If you reach 50 and you are not in a pension scheme then you have probably rejected a pension several times.

“It could be that [they] are saying there is no point because they are too close to retirement. If that is the case then we need to work harder on communication.”

Boulding added if someone in their fifties had alternative saving methods they should be informed that a pension would provide a far superior return, as the employer contribution would give a 100 per cent boost to their investment.

Last week, Pensions Week reported opt-out rates as low as
5 per cent at the UK’s largest employers, confounding official predictions.

Payroll provider Ceridian has now reported a 6 per cent drop-out rate from 56,000 employees it has helped to auto-enrol.

Will Aitken, senior consultant at Towers Watson, saw the higher figures for older members as not totally unexpected. “For someone starting to save in their last decade of employment, anything other than really large contributions are never going to amount to a hill of beans,” he said.

“If this means efforts to persuade younger workers to save for retirement have been even more successful than we thought, then this is good news, albeit by the back door.”

Some of those close to retirement have already received advice that it may not pay for them to save, particularly for those with only months to go until retirement.

Speaking at a fringe event at last October’s Liberal Democrat autumn conference, Mervyn Kohler, Age UK’s special adviser, said while the organisation welcomed auto-enrolment it planned to tell those close to retirement to think hard about whether it suited them individually.

The comments were subsequently qualified by Jane Vass, head of public policy at Age UK, who stressed the organisation had been “very resistant” to the idea of excluding older workers, particularly because trivial commutation could benefit some, and that many older workers could profit from a top-up to their pension incomes.