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New research has revealed the impact of the government’s flagship automatic enrolment policy in transforming Britain’s saving habits.
The Institute for Fiscal Studies (IFS) found the reform had brought almost half of the country’s small business workforce into workplace pensions, increasing participation rates by 44 per cent.
With more than a quarter of private sector employees in the UK working for a small business, the government said the figures shine a light on how automatic enrolment is improving the pension prospects of millions of people.
While fewer than 1 in 6 of these workers were saving for retirement before automatic enrolment was introduced in 2012, that figure has now reached 7 in 10. The IFS study asserts that just 26% of small business workers would have been saving into a workplace pension today without the dawn of automatic enrolment.
The research also revealed 91% of private sector employees work for an employer that offers a workplace pension.
"Automatic enrolment has been an extraordinary success, transforming pension saving and improving the retirement prospects of more than 10 million workers already," said the Minister for Pensions and Financial Inclusion Guy Opperman.
"As this report shows, small business owners all over the UK have made this possible, with participation rates estimated to have been increased from 26% to 70% due to automatic enrolment. This radical reform is creating a new relationship between the employee and their employer," Mr Opperman added.
The government said it is committed to making sure that small business owners throughout UK are able to thrive and grow.
Official research shows that 70% of small and micro employers found the ongoing administration of their workplace pension scheme easy.