Survey finds decline in level of intended pension contributions
The amount of money that employees are willing to earmark for auto-enrolment contributions has dropped by a quarter, according to new research.
The average worker still waiting to be auto-enrolled into a pension scheme by their employer is now prepared to contribute £51 per month, compared to £67 when asked last year.
The findings come from the 2013 Scottish Widows Workplace Pensions Report, which surveyed more than 5,000 people.
So far, over one million employees have already been successfully auto-enrolled in the UK, but there are around 8.6 million eligible workers yet to reach that stage.
The minimum auto-enrolment contribution is currently 2 per cent for a worker, alongside an employer contribution of at least 1 per cent. The required overall contribution is set to increase to 8 per cent by 2018, but people can opt to pay in more.
However, the report revealed that current saving levels – whether through auto-enrollment or other types of pension plan – were not enough to provide the desired income in retirement for most workers.
The survey also found that awareness of auto-enrolment had increased from 39 per cent in 2012 to 65 per cent this year. But 28 per cent of respondents who had already been auto-enrolled were unaware of how much they contributed, while 44 per cent did not know how much their employer was paying in.
The number of people canvassed who thought their employer should give them some form of guidance around finances in retirement increased sharply year-on-year, rising from 74 per cent to 94 per cent.
But the survey showed that only one-fifth of workers would currently turn to their employer for pensions advice.
Lynn Graves, head of business development, corporate pensions at Scottish Widows, said the research had revealed some worrying trends around auto-enrolment.
“We cannot ignore the fundamental correlation between poor employee awareness of the scheme and the lack of understanding of the realities of retirement. The alarming fall in the amount that employees are willing to contribute only serves to highlight this,” she said.
“Auto-enrolment is a vital tool for improving savings behaviours, but it cannot work in isolation to change the nation’s attitudes to retirement. The pensions industry, government and employers have to educate the UK workforce about the importance of saving adequately for retirement, and how their workplace pension scheme can help them to be comfortable in old age.”