An update on the Auto Enrolment landscape
A recent report from Scottish Widows on Workplace Pensions has unearthed some increasingly positive trends. However, it also the odd alarming statistic which we’ll illustrate later.
The general view amongst workers now is that the majority of them understand Auto Enrolment and why they are part of a Workplace Pension, with 56% of workers now saving into a recognised scheme through their employer.
Educating employees
Employers are now recognising that there are challenges with educating their employees. Younger employees believe they should be experiencing more support in the workplace. Could this be due to younger employees not understanding the pension’s landscape? Or perhaps how their decisions at this point in their life may affect them in retirement? A 50-year-old will no doubt view their impending pension as more of a priority than a 30-year-old.
Smaller businesses still have a long way to go to catch up with their larger counterparts. There will always be more challenges for smaller businesses who may not have the resource or ‘know-how’ within their organisation, compared to a larger business.
The proportion of workers saving nothing still stands at 18%, a 1% drop from last year. Although encouraging, it still means a huge number of people aren’t preparing for the future.
With 25% of people saving because they were offered Auto Enrolment, the success of the scheme is clear, however 31% of workers aged 30-39 still worry they will not have enough for retirement.
Opting out of pension scheme
We were really interested to see why people choose to opt out of an employer pension scheme. It shocked to hear that 9% opt out because their employer encouraged them to do so. Employers cannot opt employees out of pension schemes. Only an employee can choose to opt out and they must never be coerced into doing so.
Ongoing education around Auto Enrolment still seems to throw up misunderstandings, with many workers not knowing that their minimum contributions will go up from 2018. What is positive though is that only 3% claim they will opt out once this happens, showing that people are by and large happy about saving into a scheme, even when their contributions will increase.
IEP Financial received a call recently from a couple who had no savings for their retirement and were looking at what their options were. It was a difficult conversation with the family to explain that without savings of any sort, their options were somewhat limited. With only the state pension to rely on, their standard of living was going to change drastically and there was a good chance they were going to have to sell their home.
Now is always a good time to look at your savings for retirement
We would like to remind everyone that NOW is always a good time to look at your savings for retirement; whether you are 18 and just starting a new role, or 60 and want to look at your options. Speak to your employer and if you feel they can’t provide the support you need; speak to an Independent Financial Advisor.
For more information on Workplace Pensions or Personal Pension schemes; please call us on 01273 208813 to speak to one of our Independent Financial Advisors. Alternatively you can email us on [email protected]
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The value of investments can fall as well as rise and past performance is not a guide to the future. The content of this publication is for information only. It does not represent personal advice or a personal recommendation, and should not be interpreted as such. Please do not act upon any part of it without first having consulted an Independent Financial Advisor.
