24 June 2024

For the past decade we have seen what a success Automatic enrolment for pensions can been for employee retirement savings. But is there more that can be done via similar methods?

This is exactly what the National Bureau for Economic Research have investigated, analysing data from two large UK studies on payroll contributions for short-term savings.

The first study, conducted across two firms, saw employees randomly assigned to be opted in, opted out or have an active choice in participation into the short-term savings program. The second study followed a company that had previously offered such a scheme on an opt-in basis, the switched the model to opt out for new hires into the business.

When analysed at later dates, both studies showed an automatic enrolment participation rate roughly 48 percentage points higher than opt-in enrolment.

Additionally, it was commented that a contribution rate of roughly 2% of gross pay is a “level that a significant share of workers is willing to accept.”

With benefits and schemes being a large part of recruitment and retention strategies, is it time to expand how we view automatic enrolment into more than just pension schemes?

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