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Pension auto-enrolment eludes employees
More than two thirds of UK employees have little or no understanding of upcoming pension changes, despite auto-enrolment coming into force for many employees in October this year, a study by Aviva has found.
The results highlight a consumer awareness gap between the 70 per cent of employers who are aware of the new legislation, and a significant number of private sector employees who are uncertain of what auto-enrolment will mean for them.
During the next few years, all eligible private sector employees must be automatically enrolled into a workplace pension scheme, with employers required to contribute to each individual's pension fund, in a Government bid to encourage more workers to save for their retirement.
Researching the views of 200 private sector UK companies against the opinions of more than 2,000 private sector workers, the Working Lives report found that 43 per cent of businesses now have provisions in place for the introduction of auto-enrolment, yet only 9 per cent of employee's were aware that they would be automatically enrolled into a pension scheme for the first time.
The research also found that predicted opt-out and opt-in rates by businesses and workers were relatively similar. Nearly half (43 per cent) of employees said they would remain opted into a pension scheme once enrolled, with 27 per cent of these happy to have a pension and 8 per cent saying they would contribute additional payments themselves.
The remaining 37 per cent who said they would opt out believed it would be unaffordable (18 per cent) while 16 per cent said they would prefer to make their own pension arrangements.
Graham Boffey, Aviva's managing director of corporate benefits, said: "Companies are increasingly going to need to find relevant and compelling ways to talk to their employees about their savings and benefits options. And as more people start to use the workplace for managing their money, practical planning tools and clear guidance will be essential."
"While the time, resources and commitment being called for from employers over the next few years should not be under-estimated, there are clear benefits for those who really understand what savings and benefits their employees value, and importantly, how best to discuss them in the workplace."
The study called for employers to boost engagement about auto-enrolment, and for the pension's industry to minimise opt outs by positively selling the benefits if retirement saving.