9.9m unaware of pension changes
The Scottish Widows Workplace Pensions Report 2012 reveals that 52% of workers – equivalent to 9.9m people in the UK – are completely unaware of the impending changes, despite an increase in the average amount people are willing to save for retirement.
Auto-enrolment will initially see employees of the UK’s biggest companies automatically entered into their workplace pension schemes and will extend to all other employers over the coming five years.
Lynn Graves, head of Business Development, Corporate Pensions at Scottish Widows, said: “It is shocking that there remains such a huge gap in awareness, and that the media has had to step in to play a pivotal role in educating people about these changes.
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, and it is clear that information is still not reaching the audience it’s intended to target. Educating these employees needs to be a top priority for the industry and the government.”
Scottish Widows found that the majority of workers display an ‘alarming’ lack of awareness of the new legislation, with only a third of employees on an income of under £20,000 per annum conscious of the upcoming changes.
Of those who are aware of auto-enrolment, only 16% found out about the changes from their employer. Nearly two thirds say they found out through the news and media, which Scottish Widows say shows the clear need for more communication and education from industry, employers and government.
Despite the lack of knowledge about auto-enrolment, those who are aware of the scheme are said to be ‘overwhelmingly in favour of it’. Only 11% of UK workers plan to opt out of auto-enrolment, with 32% of them stating that the main reason for this is a concern that they won’t be able to afford the contributions.
In a further sign that UK adults are taking increasing responsibility for their retirement, the amount that workers are willing to pay into their workplace pensions has doubled since last year from £37.50 a month to £76.95, revealing a substantial shift in understanding of the levels of payment required for a comfortable retirement.
However, even based on this increased level of contribution, 33% of people believe that it won’t be enough to provide them with an acceptable standard of living in retirement, proving that auto-enrolment can only go so far in fixing the nation’s lack of savings culture.
Lynn Graves continued: “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.”