Millions to give auto-enrolment the red card - Pensions - News - Moneyfacts

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Millions to give auto-enrolment the red card

Millions to give auto-enrolment the red card

Category: Pensions

Updated: 22/11/2011
First Published: 20/10/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

There are fears that millions of people could turn their backs on the Government's landmark plans to automatically enrol workers onto pensions.

It is hoped that up to nine million new savers will be created by the scheme which will see people that are not in a company work scheme automatically placed into a pension programme.

Auto-enrolment is set to be phased in from next year.

But research by the National Association of Pensions Funds (NAPF) has found that one in three people are unlikely to stay in the workplace pension they are enrolled into.

It is a rise from the one in four that were predicted to drop out in 2007 before the economic downturn, and means that three million people could decide to opt-out of the initiative

The figures represent a blow for the Government, which hopes that the reforms will tackle the UK's pensions saving crisis.

Asked why they would opt out of the pension, half (48%) said they cannot afford the contributions, but 29% said they do not trust the Government, and 26% said they do not trust the pensions industry.

Suspicion about pensions and charges was echoed elsewhere in the survey - 80% want greater transparency about how pensions work and what they cost.

The NAPF said that fears about fees and charges represent a real threat to the success of the auto-enrolment scheme.

Speaking at the body's annual conference, the chief executive of NAPF said that the figures were alarming.

"The pensions industry has to be much more upfront about what it is doing. People need information about their pension in a form they understand," she added.

"That means pounds and pence, not basis points and unit prices.

"With auto-enrolment just around the corner, the industry needs to do more to help people engage with their pension."

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