3 November 2005 - Publication of DWP Research Report No292: An evaluation of scheme joining techniques in workplace pension schemes with an employer contribution
Today the Department for Work and Pensions published research designed to evaluate how pension scheme joining techniques work in an UK context, and what circumstances may support or enhance their effectiveness. The study evaluated the impact of these techniques on pension scheme membership where there is an employer contribution and the effects for individuals who did, and did not, become scheme members.
The research involved three phases: exploratory interviews with expert observers of pension developments; detailed case studies with private sector and public service employers who had experience of operating the joining techniques; and focus group and depth interviews to understand the barriers and issues that deter some employers from adopting these joining techniques.
The main findings are:
- The study evidence collected suggested that Automatic Enrolment can be an effective technique for increasing pension scheme membership and that it is one of a range of techniques that can reduce employers’ and providers’ administrative burdens and costs whilst simplifying the process for employees.
- Automatic Enrolment and Active Decisions were found to be more effective at increasing membership and tackling inertia than Streamlined Joining. There were considerable variations in participation rates, however, after enrolment techniques changed in the 11 private sector schemes studied, including variations among schemes adopting the same technique.
- Employees reported that their need for information and advice about retirement planning was not reduced by the joining technique their scheme used. Across all three joining techniques, employees valued in-person communications for providing personal advice and problem-solving.
- Interviews with employees across all joining techniques showed that non-members had commonly considered whether or not to join. Some felt that they could not afford to save into a pension, and in these cases, there was some evidence that non-members had made a conscious decision not to join or had made the effort to opt-out regardless of the enrolment technique.
Notes to editors
- The research was carried out on behalf of DWP by Sarah Horack and Andrew Wood at RS Consulting. DWP Research Report No. 292 is published on 3rd November by Corporate Document Services. A free summary is available from Paul Noakes at the DWP Social Research Branch (Room 4-26a, Adelphi, 1-11 John Adam Street, London WC2N 6HT, 020 7962 8557). The report and summary are available free on the DWP website, www.dwp.gov.uk/asd/asd5
- Findings from this small scale evaluation can be used for indicative purposes and present a valuable insight into how these joining techniques work within an organisation. However it is not possible to infer causality or suggest that these findings may be generalised to similar settings.
- This substantial new qualitative evidence will be strengthened with quantitative evidence from other sources. The Employers’ Pensions Provision (EPP) survey 2005 will provide nationally representative statistics on the proportion of employers operating various joining techniques that are nationally representative.
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Prepared by the Department for Work and Pensions Pensions Analysis Directorate