Auto-enrolment savers want employers to ‘offer full financial advice’
About 33 per cent of workers surveyed said full financial advice should be offered by companies operating a pension scheme. More than a third (36 per cent) also want their employer to gradually increase the amount workers contribute by small amounts each year.
However, Scottish Widows also found just 17 per cent of respondents would turn to their employer for guidance on pensions, this compared to 25 per cent who would opt to go to an independent financial adviser.
Scottish Widows head of business development, corporate pensions Lynn Graves said: “Auto-enrolment has undoubtedly transformed the financial futures of a generation of employees since its introduction in 2012 and employers should be applauded for the role they have played in allowing it to enjoy so much success so far, particularly among target groups such as younger workers and those on lower incomes.
“However, as we mark the second anniversary of the introduction of the legislation, it is important that employers now listen to demands from their employees to fulfil their responsibility and ensure they have all the tools at their disposal to make the right decisions about their savings.
“While we have clearly come on in leaps and bounds in getting people to think about their retirement, it is important that employees are made aware of the need to be saving above the minimum amount if they want to truly safeguard their finances for later life.”
Value of pensions
The survey also found employees were increasingly aware of the value of a good workplace pension – when employees were asked whether their employer’s pension scheme was a reason to remain in their current jobs, 30 per cent said it was a major incentive – a rise of five percentage points from 2013.
And yet only one in four people actually knew how much they contribute to their workplace pension, and many are confused about how much they need to save for an adequate retirement income.
While Scottish Widows recommends that saving 12 per cent of income is needed to provide an adequate income in later life, when asked about how comfortable they would feel in retirement if they made only the minimum contribution of 8 per cent, 1 in 5 (18 per cent) employees felt they would be able to live comfortably, more than 1 in 3 (38 per cent) felt they’d have a basic but acceptable standard of living, and a further 1 in 5 (22 per cent) didn’t know.