Auto-enrolment rates remain resilient, despite the financial effects of the pandemic and most recent rise in contributions rates.
This was the conclusion of Nest’s latest insight report, whose survey sample includes around a third of the UK’s working population.
It’s Retirement Saving in the UK report found that AE opt-out rates remained low, at just under 8 per cent as of 31 March 2020. However these opt out rates have increased marginally to 11 per cent in the first half of this fiscal year (April 2020/21)
The figures show there were no significant changes to average contribution levels between April 2020 and September 2020, which covers the period of the first lockdown.
Nest found the majority of its members have continued to save, with around one fifth contribution more than the minimum level.
Nest says that even through turbulent times savings habits have persisted, and many millions have benefited from the buffering effect of the UK’s furlough scheme. This Coronavirus Job Retention Scheme (CJRS) ensured minimum payments continued to be made into workplace pensions.
This survey also covered the period when an increase in minimum auto enrolment pension contributions took place, increasing total contributions from 5 per cent to 8 per cent of band earnings.
Nest Insight analysis director Matthew Blakstad says: “Whilst it’s too early to tell the full story of how the Covid-19 crisis will impact pension saving in the UK, this report provides data from the midst of the crisis and insights into the important role that the government’s furlough programme has played in supporting long-term saving.
“More than half of Nest’s members are earning less than £20,000 and many work in transient forms of employment, often in sectors that have been badly hit by the effects of the Covid pandemic.
“Yet for the most part these members have continued to save, with around one fifth contributing more than the minimum contribution rate. The opt-out rate has increased slightly since March, but this change is not nearly as marked as some might have predicted. For the most part, people are acting just as they did before the pandemic. This demonstrates the staying power of defaults and auto enrolment, even in difficult times.”
Nest points out that as at 30 September, allies funds were performing above their benchmarks, despite market volatility at the start of this crisis.