Data from Scottish Widows has found that many people are still confused about the right amount they should be saving for an adequate retirement, with one in four people not knowing how much they contribute to their workplace pension.
While Scottish Widows recommends that saving 12% of income is needed to provide an adequate income in later life, when asked about how comfortable they would feel in retirement if they made only the minimum contribution of 8%, 1 in 5 (18%) employees felt they would be able to live comfortably, more than 1 in 3 (38%) felt they’d have a basic but acceptable standard of living, and a further 1 in 5 (22%) didn’t know.
On the second anniversary of the introduction of auto-enrolment for the UK’s largest organisations today, it is clear that employees are looking to their employers to plug the knowledge gap and help them save the right amount for the future. A third (33%) of employees believe that employers who offer a pension scheme should also offer full financial advice, and over a third (36%) want their employers to increase for them the amount they pay in automatically by a little each year.
However, many within the UK workforce do not think their employers are fulfilling this responsibility, with just 17% saying they would turn to their employer for guidance on pensions, compared to 25% who would go to an independent financial adviser. This is despite the fact that employees are becoming increasingly aware of the value of a good workplace pension; when employees were asked whether their employer’s pension scheme was a reason to remain in their current jobs, 30% said it was a major incentive – a rise of five percentage points from 2013.
Lynn Graves, Head of Business Development, Corporate Pensions at Scottish Widows, commented: “Auto-enrolment has undoubtedly transformed the financial futures of a generation of employees since its introduction in 2012 and employers should be applauded for the role they have played in allowing it to enjoy so much success so far, particularly among target groups such as younger workers and those on lower incomes.
“However, as we mark the second anniversary of the introduction of the legislation, it is important that employers now listen to demands from their employees to fulfil their responsibility and ensure they have all the tools at their disposal to make the right decisions about their savings. While we have clearly come on in leaps and bounds in getting people to think about their retirement, it is important that employees are made aware of the need to be saving above the minimum amount if they want to truly safeguard their finances for later life.”
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