Workplace Pensions

Workplace Pensions: A Good Start, but is it Enough?

KLOFinancial |

With October marking seven years since the beginning of workplace pension auto-enrolment, there is no denying the fact that some grand government schemes can be a success.

Back in 2012, there was much skepticism when the first phase of automatic enrolment began, as an earlier attempt to encourage workplace provision through stakeholder pensions had been unsuccessful.

In the beginning, the scheme was focused on the largest employers. This led to confusion surrounding many SME and start-up companies who were worried about the administrative burden. However, what is the current status of workplace pensions? What is likely to happen in the future?


Before the beginning of the initiative, only four out of ten eligible private-sector employees were members of workplace pensions. However, auto-enrolment has hugely increased the number of people who are placed in a workplace pension. By 2018, nine out of ten employees were workplace pension members, and according to the Department for Work and Pensions, this included 85% of those in the private sector and 93% in the public sector.

Minimum Level of Contributions

There was also a large increase in the minimum level of overall contributions from April 2018, and this did not seem to affect employee enthusiasm. Another minimum contribution increase came into effect from this April, seemingly with similar acceptance, however there has been no firm figures yet.

In late 2017, the government acknowledged that pension contributions for employees are still too low and need to be increased. In this government’s review, it was suggested that over 12 million people were ‘under-saving’ for their retirement, with most of those under-savers earning more than £25,000 a year. It was therefore concluded that higher earners were no longer contributing enough to their pensions as there were no earnings-related element to the state pension. The flat rate state pension introduced in 2016 represents a smaller proportion of earnings at retirement for those on higher pay.


The introduction of auto-enrolment has left one sector of the working population untouched, which is the self-employed. The numbers have been increasing to the point of where they account for around 15% of the UK labour force in 2017. However, pension participation among the self-employed has fallen.

The Future

The government are likely to find another way to raise minimum contributions, however it is unlikely that this will happen any time soon. If you are an employer, remember that every three years, you must re-enrol any employees who have left your pension scheme. If you are an employee, KLO Financial Services can help you decide whether you need to prepare for potential contribution increases to meet your retirement goals.

If, however, you are self-employed, it’s vital that you are not among the 85% who do not contribute into a pension.                

KLO Financial Services can support you with whatever you need. We can assess whether your workplace pension is meeting the needs of your business and employees, as well as explore how your workplace can get the best out of it. Talk to one of our local pension advisers today by calling your local office and prepare for your future.