I had an update meeting with The National Employment Savings Trust (NEST) last week.

NEST are, of course, heavily involved with some of the largest UK employers who have already began the Auto-Enrolment process, and are therefore able to provide a prospective on how Auto-Enrolment (AE) is progressing for such employers. And one of their findings was particularly surprising to me, and I think will be of interest to those following the blog.

As most followers will know, AE effectively places every eligible UK employee into a company supported pension scheme, unless the employee elects to opt-out of the process.

But there are many employees who do not automatically qualify for AE by virtue of their earnings level and/or age. Such employees have the option of voluntarily joining the scheme (and such joiners are known as ‘opt-ins’ in AE jargon). Many opt-ins will also benefit from an employer contribution, so this is more than an academic point for employers.

I have often said that most employer’s should not expect large numbers of opt-ins. My rationale was quite straightforward. If pension membership were that attractive, then the UK would not have had any need for the AE legislation (which provides a push into pension savings) in the first place.

Yet NEST have found some interesting early indicators here. One company found that they had around 400 opt-ins as part of the AE process. This is a surprise, and is clearly something that small and medium sized employers need to be aware of.

So does this mean that most employers should expect very large numbers of opt-ins?

Probably not. Whilst I don’t have any employer details to work from, the employer in question will almost certainly be one of the very largest in the UK. Those organisations that have already staged will typically employ more than 120,000 employees, and therefore 400 opt-ins is only a tiny percentage of the overall workforce.

And there are probably other factors at play here. The very largest employers will often have a generous pension offering making opt-in a more attractive option. It’s also possible that many of those that have opted-in are already past their retirement age, and are already in receipt of a pension income. Such individuals will possibly be working part-time hours to supplement their retirement income, and are therefore likely to see the opportunity of further adding to their retirement savings as a good thing.

Neverthless, it does suggest that opt-in’s will perhaps be more prevalent than might be expected, and it’s certainly something that employers should be aware of when considering their buedgtry requirements for the AE process.

Best regards

Steve