Opt-outs from Royal London auto-enrolment schemes increased from 5 per cent in the first quarter of 2015 to 8 per cent in Q4, the provider’s IGC report shows.
The provider says this fall is likely to be as a result of the increasingly small size of schemes enrolling, where employers often do not have the same commitment to communication of pension benefits as with larger schemes.
The higher opt-outs could also be related to staged increases in contributions. While mandatory contributions do not increase until 2018, some employers are starting to stage increases earlier, and have already started moving to 1 per cent employer plus 2 per cent employee contribution.
The report shows the proportion of members invested in the default investment option increased from 72 to 82 per cent over 2015.
A spokesman for Royal London says: “Yes there has been a slight increase, but the early signs are that this quarter will show opt outs back below 7 per cent. We are not sure why this increase in opt-outs has happened, but we think given the small amount of data we have it is probably too early to draw any hard conclusions.”
