Pension reforms

October 02, 2012, 11:21 AM GMT+0

A YouGov market intelligence report into workplace pension schemes reveals that those which the Government’s automatic enrolment reforms are meant to help the most are least in favour of the change, while older and more affluent employees are the most supportive.

The study isolated younger employees (particularly women) on lower incomes as being the primary targets of auto-enrolment, which all employers must begin by law starting this month. This group was found to be the most opposed to the reform, however, with 45% of those aged 25 to 39 being against auto-enrolment, compared to an average of 37%. At the same time, those most in favour are men aged 55+, at 61%, who the study determined were the least targeted by auto-enrolment because they tend to have the most comfortable financial situation in terms of savings for retirement and pension benefits.

Simon Mottram, Financial Services Consulting Director at YouGov, warned that without adequate education about the benefits of paying into workplace pension schemes, the employees the reforms are intended to target could end up dropping out.

“Auto-enrolment is aimed squarely at those employees who are most at risk of not having adequate resources for their retirement, and yet the findings of our market intelligence report clearly indicate that it is these people who would be most likely to opt-out. Auto-enrolment will aid young, female and less affluent employees to get onto the pension ladder, but these are the same adults who find it hardest to make informed choices about the value of pension schemes available to them. They are also the least willing to take decisions about where or how their pension money is invested” said Mottram.

Low awareness

The YouGov SixthSense report also shows low levels of awareness amongst employees about auto-enrolment pension schemes. It found that less than one-third (28%) of employees in the UK had heard of auto-enrolment, and in fact the better employees’ current workplace pension arrangements the more likely they are to have heard of auto-enrolment. Very few employees have received any information about auto-enrolment from their employers (only 10% are aware of having received anything), and even adults who are aware of auto-enrolment have received little information.

Education needed

Despite the unevenness in levels of support for the reforms, and weak awareness amongst all employees about auto-enrolment, the government-implemented reforms were seen as a positive change across the board. 43% of UK employees said auto-enrolment should be compulsory with no opt-out, while 37% said it should not be compulsory, and 20% were unsure.

“Employees that are familiar with auto-enrolment have generally positive views about it, which is reflected in the fact that a plurality of British workers are in favour of making auto-enrolment compulsory with no opt-out. But the low levels of knowledge about pension reform shows that there is an urgent need for both the Government and employers to do much more to educate their employees about the benefits of workplace pension schemes,” said Mottram.

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