Auto enrolment impacts people’s finances beyond pension savings, research finds

  • New evidence provides greater insights into the boost in people’s savings that followed the introduction of auto enrolment.
  • It also reveals a small average increase in people’s unsecured borrowing at the same time, as well as a slight average increase in credit scores, and a slight decrease in debt defaults.
  • Automatically enrolled pension savers also become slightly more likely to take out a mortgage.
  • This research shows that people’s finances are interconnected and helps to build our understanding of the wider impacts of auto enrolment beyond pension saving.

New preliminary research released today suggests that auto enrolment into pension saving can impact other areas of people’s finances. Most people who’ve been automatically enrolled haven’t opted out, so their employers are deducting money from each payslip to put into a pension pot. Whilst this is a good thing, what if some of these people are taking on more debt to compensate for the cost of these contributions?

Nest Insight has been working with the University of Nottingham and Experian to generate a new dataset that matches up people’s pension and credit records, creating a unique opportunity to explore the interaction between auto enrolment and other areas of people’s finances, while preserving people’s data privacy.

The research was made possible with the support of the BlackRock Foundation and the Money and Pensions Service, and enabled by Nest Insight’s emergency savings programme that was also supported by JPMorgan Chase.

As well as increasing people’s pension savings—average savings in Nest were £32 per month, and estimated total pension savings were £38— the research found that after being automatically enrolled people’s credit scores showed a positive increase over time and their likelihood of defaulting on debts decreased. Interestingly, people were also slightly more likely to take out a mortgage, suggesting perhaps that being automatically enrolled may have encouraged some to take another step on their financial journeys.

The research also found that during the early phases of the auto enrolment rollout, there was an average increase of £7 per month in existing overdrafts or loans. Whilst this may have been a short-term effect as people adjusted to the cost of their pension contributions, the evidence does suggest a need for nuance in any consideration of raising auto enrolment minimum contribution levels in the future.

Matthew Blakstad, Analysis Director at Nest Insight, comments:

“The introduction of auto enrolment significantly increased people’s savings, meaning that most UK workers are now building towards greater financial security for later life. More recently there have been calls on the government to increase minimum auto enrolment contribution levels. This research therefore provides a timely reminder of just how interconnected people’s finances are.

“Whilst the initial increase in debt that some savers experienced is small, the research highlights the need to take into account the potential impact on people’s wider financial lives when considering any changes to auto enrolment. If contribution rates were to increase, it may be that an additional ‘safety valve’, particularly for those on lower earnings, could help protect people against potentially negative outcomes. One option could be to introduce an emergency savings component to the workplace auto enrolment system.

“Our own trials of emergency savings are showing how this can work in the real world. We’re excited to see the positive impact that greater take-up of these approaches will make.”

John Gathergood, Professor of Economics at the University of Nottingham, said:

“In order to understand the full effect on individuals of policies such as automatic enrolment into pension saving, we need to look beyond the immediate impact on what happens within the pension to the wider impact on the individual finances. This research demonstrates the value of that approach. By linking pension data with data on other aspects of individual finances, we have been able to statistically quantify the effect of automatic enrolment on individual debt.

“The results from this study suggest that automatic enrolment may have quite complex effects on individual finances, affecting creditworthiness, mortgage decisions and unsecured borrowing. This research is valuable because it informs current policy debates over future contribution rates, while also helping to build a picture of the medium-term impact of automatic enrolment.”

Introduced in 2012, auto enrolment has helped millions of people in the UK who weren’t contributing to a pension to begin doing so. It’s estimated that annual pension contributions increased by over £32bn in 2021 compared to 2012, as a result of the policy.[1]

To conduct the analysis, Nest Insight worked with leading researchers from Harvard, Nottingham, and Yale universities, as well as Warwick Business School at the University of Warwick.[2] Together they looked at the roll-out of auto enrolment at employers with fewer than 30 workers, which took place between 2015 and 2017. The default minimum contribution rate at this time was just 2% of income, with the employee usually paying 1%. Because the timing of the roll-out was randomised at the employer level, the researchers were able to see with a high degree of accuracy the effects of auto enrolment on the financial experiences of the hundreds of thousands of people who were enrolled into Nest at this time.


Notes to editors

Read Nest Insight’s blog: How much are UK workers really saving as a result of pensions auto enrolment?

About auto enrolment

The UK introduced workplace pensions scheme auto enrolment in October 2012. Under the legislation, employees and employers make mandatory minimum contributions each pay period into a pension based on the employee’s eligible earnings. Workers must be automatically enrolled if they earn £10,000 or more a year with an employer, though they can also ask to be enrolled by their employer if they earn less. Larger employers were brought into the programme first, with employers of all sizes participating by February 2018.

The level of minimum mandatory contributions into defined contribution (DC) pension schemes was increased in phases, starting with 2% of band earnings with at least 1% contributed by employers, rising in April 2018 to 5% with at least 2% contributed by employers and rising again in April 2019 to 8% with at least 3% contributed by employers.

Workers can receive tax relief from the government on their contributions, so that a gross contribution of 5% made by the employee currently involves a net contribution of 4% for most.

Employees can opt out of auto enrolment within one month of being enrolled. They can also stop contributions at any time. However, they can’t usually access the money in their pension pot until they reach age 55.

For further information, please see: How the UK Saves – essentials of the UK retirement system (PDF)

About Nest Insight

Nest Insight is a public-benefit research and innovation centre finding better ways to support people’s financial wellbeing, now and in later life. We focus on understanding the lived experience of people on low and moderate incomes, learning about their financial needs, challenges and goals through rigorous and thoughtful analysis. We partner with employers, product providers, academics and policymakers to identify, invent, test and evolve practical solutions and see what works best for people in the real world. This builds the case for systems-level change. Our findings are shared widely and freely so that people around the globe can benefit from our work. For more information, visit:

[1] The 2022 data further show a £29bn real-terms increase.

[2] Beshears, J. et al (2024) Does pension automatic enrollment increase debt? Evidence from a large-scale natural experiment (PDF).