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More employees aware of Govt pension scheme

More employees aware of Govt pension scheme

Category: Pensions

Updated: 09/09/2013
First Published: 09/09/2013

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 It is now over 6 months old so the content may be out of date.

Employee awareness of the auto-enrolment workplace pension scheme has risen significantly over the last year.

According to Scottish Widows' Workplace Pensions Report, 65% of employees now know about the scheme, up from 39% last year.

Worryingly, however, the amount that employees who are yet to be auto-enrolled are willing to contribute has fallen by £16, from £67 last year to £51 per month in 2013.

Scottish Widows points out that while this is still above minimum contribution requirements, it remains far under what is needed to match retirement aspirations.

Unveiling the lack of knowledge surrounding auto-enrolment, over a quarter (28%) of respondents who are already auto-enrolled are unaware of how much they contribute, while 44% have no idea how much their employer is contributing.

"Auto-enrolment is a vital tool for improving savings behaviours, but it cannot work in isolation to change the nation's attitudes to retirement," said Lynn Graves, head of business development, corporate pensions, at Scottish Widows.

"The pensions industry, Government and employers have to educate the UK workforce about the importance of saving adequately for retirement, and how their workplace pension scheme can help them to be comfortable in old age."

What is auto-enrolment?

Auto-enrolment is part of the Government's drive to address the pensions crisis and encourage more people to invest in their retirement by saving money into a pension scheme.

Over the course of the next five years, businesses of all sizes will be required to auto-enrol their employees into a pension scheme.

The Government states that employers must contribute a minimum percentage of 2% of earnings, made up from 0.8% from employees, 1% from the employer and 0.2% as a result of tax relief.

So far, however, it is still early days for the initiative, with only the biggest companies (over 250 employees) being required to implement auto-enrolment. Medium-sized firms will have to start auto-enrolling employees from April next year, while small businesses with 49 workers or less will be required to implement the changes from May 2017.

What Next?

5 reasons why you need a workplace pension

Types of Pensions Explained

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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