You are here: Home - Retirement - Retirement planning - News -

One in eight may abandon workplace pensions as contributions rise

0
Written by:
11/12/2017
As many as one in eight employees may opt out of their workplace pension schemes when contributions rise under auto-enrolment rules in April next year, according to research by Aviva.

However, the research – reported in The Daily Telegraph – also showed many are undecided, with 4% definitely opting out, half still planning to save, and the remainder yet to make up their minds.

Under auto-enrolment rules, contributions will rise to 5% (from 2%) next April, with a further rise of 8% planned for 2019. There remain concerns that many will choose to opt out when the new contribution limits are introduced, and the survey of 2,007 private sector workers showed one in eight people were contemplating leaving their scheme.

A number of groups, including Scottish Widows and Aviva, have called for higher auto-enrolment contributions to beat chronic underfunding of pensions. However, ministers have resisted any further extension in the rules, believing that it may lead to more people opting out and dent the good work achieved by auto-enrolment in encouraging pension savings. Since its introduction, more than 8.5 million employees have signed up for a workplace pension and savings rates have sky-rocketed.

There have been calls to extend auto-enrolment to under-served parts of the market, such as the self-employed. One in five adults in the UK still saves nothing into a pension, with the problem particularly acute among younger people.

Workplace pensions are often an effective way to save for retirement because employers are compelled to match your contribution. This means you are effectively getting 10% of your salary paid in, despite paying just 5%. The government also contributes through tax relief and pension savings can mount up quickly.

See YourMoney.com’s Five points you need to know about auto-enrolment.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
2326761-housebuilders
Improving not moving is the new property trend

One in four homeowners want to move home within the next five years, but the costs involved make it hard...

Close