A report on auto-enrolment opt-out rates has been produced following research undertaken by the Department for Work and Pensions (DWP).

Introduced for larger employers in October 2012, auto-enrolment appears to have had a high initial success rate - with over 90% of auto-enrolled employees remaining in their workplace pension scheme a month after being enrolled. The one-month mark represents the expiry of the ‘opt-out window’ i.e. the time at which employees should have opted out of the scheme in order to have their initial payments refunded. The findings from the 50 employers studied across the public and private sectors indicate that the average opt-out rate in this period was only 9%. A very small number of employees chose to opt out after the end of the initial one-month period.

Interestingly, most of the employees choosing to remain in the scheme were from the under-30s age group, with the highest opt-out rate being in the over-50s category. The opt-out figures were also higher in circumstances where employee contributions were set above the minimum level.

A key factor prompting opt-out appeared to be contractual enrolment, with employees who had already opted out of a workplace pension scheme being doubly likely to opt out again when auto-enrolled.

Of those employees studied, approximately a quarter were automatically enrolled in a workplace pension scheme – with 61% already being members of a scheme.

Auto-enrolment for small and medium sized employers will continue to roll out over the next five years.