UK Commission Favors Auto Enrollment

October 21, 2005 ( - A special commission appointed by the UK government is expected to recommend in its final report that employees should be automatically enrolled to contribute in their workplace pensions.

Dow Jones reports that the recommendation is aimed at helping reduce the pension shortfall that will grow bigger as the UK’s retirement age rises. According to an estimate from the commission, if auto enrollment were set at 5% of salary and 50% of workers who were enrolled didn’t opt out, an additional £5 billion in pensions contributions from employees would be brought into the system.

In the UK, pension funding is shared by the state, employers, and individuals. The government allocates about £61 billion, or nearly $107 million, of its roughly £500 billion annual budget to spending on state pensions, according to the Dow Jones report.

The commission is led by Merrill Lynch Europe Vice Chairman Adair Turner and is scheduled to deliver its report on Nov. 30. The auto enrollment recommendation will be a key feature of the proposal, according to a spokesperson familiar with the commission’s recommendations. In addition, the commission will recommend that it be established on a permanent basis, rather than be disbanded after it issues its final report, so it can keep a watching brief on the system.