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Pensions minister confident auto-enrolment will reverse the 15% slump in pension saving since 2007

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Automatic enrolment will reverse the slump in pension saving, with around half of British firms with no pension provision choosing NEST for their workers, according to pensions minister Steve Webb, as new research shows a drop of 15% in employees’ pension saving.

Only a quarter of private sector employees are active members of their employers' pension scheme in Britain today (26%), down from a third in 2007 (31%), representing a 15% drop in employees' pension saving overall.

Only 31% of private sector organisations currently offer any pension provision for their staff. This is down from 41% in 2007.

And 45% of firms without a current workplace scheme intend to enrol all their employees into NEST, the National Employment Savings Trust. A further 11% say they will set up their own scheme, while 5% say they will use a combination of both.

Webb said: "Automatic enrolment into workplace pensions will start the monumental shift we need to get millions more people in Britain saving for their retirement.

"It's a major change for business too, especially for firms that don't currently offer pension schemes for staff and it is good news that so many say they will use NEST.

"NEST is designed around the needs of people who are new to pension saving, with low charges, costs and easy to use services. We expect around half of all new savers to be NEST members, including many low-paid and part-time workers, women and young people, who will get a contribution from their employer for the first time."

Most firms who already offer some form of workplace provision plan to keep all current members of their largest or only scheme in their existing scheme (60%). Six per cent plan to enrol all current members in to NEST. Half of employers say they will use their existing scheme for all non-members and new employees, and 19% would enrol all non-members and new employees into NEST.

Over half of all employers (55%) who intend to keep at least some employees in their largest scheme say they are likely to maintain their current contribution levels for existing members. A third (34%) say they are likely to increase contributions. Only 6% say they would reduce contributions.

About a fifth of all private sector firms offer some form of workplace based scheme open to new members. Even where employers offer open schemes access may be restricted to certain groups of employees such as those who had been working for the firm for a certain period of time.