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Younger workers could ‘opt out’ in droves

Younger workers could ‘opt out’ in droves

Category: Pensions

Updated: 07/02/2012
First Published: 07/02/2012

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 It is now over 6 months old so the content may be out of date.

Younger workers could 'opt-out' of auto-enrolment in their droves, new figures have revealed.

Despite workers being enrolled onto pensions from this year, it seems likely that the younger generation could make the 'here and now' the priority over long-term planning.

More than half (59%) of corporate financial advisers think that up to 30% of UK workers could opt out of the Government's new auto-enrolment regulations due to be introduced from October 2012, research from Aviva has found.

One in five advisers fear that as many as half of all workers aged 35 and under will choose to leave their pension scheme.

Almost all of those questioned predicted some level of withdrawal by workers, despite the benefits of being in a pension scheme.

Of the top five reasons advisers gave as the main barriers to saving amongst the 35 and under age group, the largest proportion (80%) say they don't think younger workers can afford to save, while:

  • 72% say that they have other financial priorities
  • 69% believe that they think they are too young to worry about their retirement
  • 63% don't think they trust pensions
  • 47% say that they don't think the younger employees understand the benefits of a workplace pension compared to other kinds of saving.

The Government is hopeful that the introduction of auto-enrolment will help people to better save for their retirement, but figures show that workers are not being given enough information about pensions and their benefits.

Only 14% of 25-35 year olds have received any data from their employer about the benefits of a workplace pension scheme, and just one in seven (15%) have access to financial planning sessions

"It's up to us as an industry to work alongside the Pensions Regulator to not only ensure the successful implementation of automatic enrolment, but make sure that employees know the options available to them, the benefits of a workplace scheme and what the consequences of opting out will have on their future lifestyle," said Paul Goodwin, director of workplace savings at Aviva.

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