68% ‘Unaware’ That Auto-Enrolment Pension Contributions Set To Rise

Automatic enrolment is a government scheme intended to help more people save for their retirement using a pension scheme where they work. Previously, many employees have missed out on pension benefits, either because they didn’t apply to join the scheme run by their company or because their employer didn’t offer a pension.

With auto enrolment, it is now compulsory for businesses in the UK to enrol those members of staff who are eligible into a pension scheme. The employer will also have to pay money into this scheme as well. All eligible employees should be enrolled into their workplace scheme by February 1st 2018 at the latest.

New research from Scottish Widows has found that while awareness of auto enrolment pensions is on the rise, climbing from 39 per cent in 2012 to more than 76 per cent in 2016, there does still appear to be a level of ignorance among people in the UK regarding this initiative.

It was found that 24 per cent are still unaware of the scheme, while 68 per cent do not know that there will be increases to the minimum contributions they’ll have to make to the schemes over the next few years. However, despite seemingly not knowing or perhaps understanding the intricacies of the initiative and how it works, 78 per cent say they will remain enrolled, with just three per cent stating they plan to opt out when contributions increase.

Although the aim of the scheme is to encourage people to save more, the Workplace Pensions Report also found that 35 per cent of people who work for big businesses and 49 per cent of those working for medium-sized companies are not saving adequately for their retirement. That said, the number of people from smaller companies who are now saving enough has risen from 40 per cent to 44 per cent in the last 12 months.

“Young people, in particular, appear disengaged with workplace savings but the good news is that they are twice as likely as the rest of the nation to save more if they had more information from their employer. As a result, the industry and employers alike need to continue encouraging all workers by providing them with ongoing support on the benefits of being more engaged with longer term savings,” director of pension propositions at Scottish Widows David Holton said.

Younger generations – those aged between 22 and 29 – were found to be twice as likely as the rest of the country to save more if they’ve been given more information from their employers. What’s more, 36 per cent of this demographic, and 31 per cent of people aged between 30 and 39, believe an employer offering a pension scheme should also provide members of staff with information and advice on how best to go about budgeting for their retirement.