Employees who decide to opt-out of their workplace pension should be given regular statements showing their lost contributions, a leading think tank has recommended, in an attempt to encourage them to opt back in.
The Who Saves for Retirement? report, published by the Strategic Society Centre think tank, has analysed employees' attitudes to workplace pension saving and considered the factors that go into savings decisions.
It found that 50% of non-savers preferred to spend rather than save for the long-term while 45% would rather have a good standard of living today than think about retirement, and they were also found to be much less financially patient than savers.
However, given that a lack of saving could lead to long-term financial difficulties, the think tank has looked for ways to address these loss avoidance issues.
Therefore, the recommendation for opt-out statements is based on the idea that if employees could see how much their savings would have been worth, and how much they actually lost in terms of employer contributions, it might encourage them to start saving and take a longer-term view.
James Lloyd, co-author and director of the Strategic Society Centre, said:
"We have always known some workers would opt-out of their workplace pension after being automatically enrolled. The Government now needs to develop additional measures for encouraging saving among workers who reject their employer scheme, even when employer contributions are available.
"Given the tendency toward 'loss-avoidance' among non-savers in our research, the Government should ensure workers opting out of their employer pensions are given regular statements setting out the contributions they have missed out on, and what their accumulated pot would be worth."
This comes on the back of a report released by The Pensions Advisory Service last week that reveals women are particularly concerned about their pension savings, with over three-quarters (76%) fearing that they won't have enough for a comfortable retirement.
The state pension top-up plans revealed a few days ago might allay some of their fears, while it's hoped that automatic enrolment will ensure all sectors of society get into the savings habit – with opt-out statements ideally being an added push for those that have yet to get started.
Increase your income in retirement by up to 40% using our online annuity planner
For more information on retirement - check out our retirement guides
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.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.