Pensions survey shows workers willing to pay more

Monday, 10 September 2012 04:57

By Ben Salisbury

More than half of employees are not aware of their firms’ plans to automatically enroll them in a company pension scheme, according to a survey of more than 5,000 people by Scottish Widows.

Auto-enrolment, the new pension scheme whereby all companies with more than just a few employees have to operate a company pension scheme begins in October, though it will be fully introduced over a five-year period.

52 per cent of respondents said they were “completely unaware” that employees will be able to join a company pension scheme.

However, the figures do show an improvement from a report in May commissioned by Aviva entitled “Working lives,” when seven out of ten people said they had little or no knowledge of the new pension.

In that survey 37 per cent of workers who do not have a pension said they would opt out of auto-enrolment. The latest survey suggests a change of heart from employees, with just 11 per cent indicating that they would opt out.

Affordability is the most common reason given for opting out, with 32 per cent expressing that view, followed by plans to provide a pension by other means selected by 19 per cent of respondents. 18 per cent say they will choose to opt out of auto-enrolment because they think the government should pay for their retirement.

Lynn Graves of Scottish Widows said: "With just three weeks to go until auto-enrolment comes into force, it is shocking that there remains such a gap in awareness."

“Auto-enrolment is designed for people who traditionally don't have access to a workplace pension scheme, such as smaller employers or those with lower incomes. Educating these employees needs to be a top priority for the industry and the government." 

A Department for Work and Pensions spokesman said: "We will boost awareness of automatic enrolment with our national campaign which includes television advertising from later this month.

"While the launch is in October, we are bringing the reforms in gradually over the next five years, so it's understandable that some people will not be aware of the changes. The Pensions Regulator is working with employers to make sure they have the information they need to explain the benefits of workplace pensions to their staff."

One encouraging trend to emerge from the latest survey is that people are recognizing that if they want a decent pension then they need to save more. Last year, the average amount employees said they were willing to pay was £37.50 a month, now it has more than doubled to £76.95 a month.

Lynn Graves added: “While it is a positive sign that people are willing to pay more into their workplace pension, substantial work must still be done to encourage people to save enough for retirement and this is a challenge for government, the pensions industry and employers. 

"As a nation we are slowly waking up to the reality of how we are going to be able to fund our retirement, many people recognising that they can’t solely rely on the State to provide the majority of their income in old age."

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