Awareness of auto-enrolment has increased substantially from over a third (39%) of employees in 2012, to almost two-thirds (65%) this year.
Employers have clearly played a pivotal role in this heightened awareness, with 26% of people saying they found out about auto-enrolment from their employer, in comparison to 16% who said this last year
In addition, employers are committed to getting the best deal for their staff, with a third (34%) of employers saying they would be willing to pay an additional 1% of payroll to ensure that staff at least get their money back when they invest in a pension, and almost a fifth of employers saying they were open to paying for advice to ensure they have the best scheme for their staff.
Despite these positive messages however, there remains a number of areas for improvement that have been highlighted by the annual Scottish Widows research, including:
- Communication around workplace pension schemes remains poor, with almost half of employees (44%) not aware how much their employer contributes
- Fewer than one in five employees (18%) would go to their employer for advice about pensions, behind the FCA website (20%), pension providers (21%), friends and family (24%) and independent financial advisers (25%)
- Awareness remains particularly poor amongst those at whom the scheme is targeted, with one in five (21%) employees on an annual income of under £30,000 still not aware of the changes.
The research also reveals that despite the progress made by employers since the implementation of auto enrolment, there is still work to be done. Around a third of employers still unsure about what arrangement they will use for automatic enrolment, with worries about the costs associated with implementing the legislation the most common reason for concern for almost a quarter (23%) of employers. Now is the time for advisers to step in and support companies to make the right decision for them and their staff.
Lynn Graves, Head of Business Development, Corporate Pensions at Scottish Widows, commented:
"On the first anniversary of auto-enrolment being rolled-out to workplace savers, it is encouraging to see the positive impact the scheme has had on employee attitudes to saving for retirement. It is particularly promising that opt-out rates for the scheme are so much lower than originally forecast. However, the biggest challenge is yet to come as smaller companies start to auto-enrol and we must continue as an industry, to work tirelessly to first engage and then educate to ensure opt-out rates remain low.
"Despite the initial success automatic enrolment has brought to encourage many individuals to start saving for the first time, it is clear that we still have a long way to go in ensuring that the nation is fully prepared for retirement. Our research found that to meet aspirations for income in retirement, a 30 year-old saver would need to save £12,000 a year, or £1,000 per month every year until retirement. In light of this, it is concerning that the amount that people are willing to save each month falls well short of this target, and is decreasing year-on-year."
