Reports and Briefing Notes

The impact of opting-out of private pension saving at younger ages

The Government is introducing auto-enrolment into workplace pension schemes, to be phased in between 2012 and 2017, for all eligible employees earning more than £7,475 and between age 22 and the State Pension Age (SPA). The policy aims to increase both the number of individuals saving in pensions for their retirement and to increase the total amount of private pension saving. Employees eligible to be auto-enrolled will retain the right to opt-out of their pension scheme and the success of the policy will in part depend upon the extent to which employees decide to do this.  

Prudential sponsored the PPI to produce a series of case studies illustrating the impact on employees of opting-out of workplace pension savings in the early stages of their working lives. The examples shown in this report are hypothetical, and the outcomes are dependent on the assumptions used to construct them. None of the findings should be generalised as being applicable to the population as a whole and the results of the case studies should not be used to advise individuals of what their own particular outcomes might be from pension saving or opting-out.

Executive Summary