Aegon has supported 2,300 employers through auto-enrolment so far. This experience has given Aegon the opportunity to look beyond opt-out rates and analyse the real trends as increasingly members stop paying into their pensions once the opt-out period has ended. This rather than opt-out data reveals the true impact auto-enrolment is having on member saving behaviours in the workplace.
Since the introduction of auto-enrolment in 2012 to the end of 2014, Aegon has seen a 53% increase in workplace policies being paid up, highlighting the risk of members accumulating multiple small pots and demonstrating the need for ongoing member engagement.
Angela Seymour-Jackson, Managing Director – Workplace Solutions at Aegon said:
“Opt-out rates alone only give you part of the story. There can be a time delay between an employee seeing pension contributions deducted from their earnings, in many cases for the first time, and perhaps deciding they don’t wish to or can’t afford to make contributions to their employer’s workplace pension scheme.
“Our experience indicates an increasing number of members are making their pension policies paid up compared to Aegon’s experience before auto-enrolment and also that the trend continues to grow as smaller employers go through auto-enrolment. In turn this behaviour will lead to an increase in the number of small pots that people will begin to accumulate as they move from employer to employer in their careers.”
Seymour-Jackson continues: “While auto-enrolment has ultimately meant more people are starting a pension, it doesn’t yet seem to have caused a shift in member saving habits and attitudes to long-term saving. Experience from our workplace pension schemes indicates that employees still seem to undervalue their workplace pension.”
Aegon believes that ongoing member engagement and empowerment of employees will help them begin to see the value of their workplace pension and how it can help to ensure their retirement needs are met.
Seymour-Jackson continues: “Gone are the days of member booklets and micro-sites. Interactive and intuitive digital tools and solutions for employers and their members will play a big part in addressing the issues around member engagement and member retention to help members see the value in their workplace pension and the benefits it will bring them in the long-run.”
“We believe that this calls for better member engagement from employers, especially the smaller employers staging this year, with the support of advisers and providers. We have piloted several member communication initiatives in the last year and they have seen great results increasing contributions and member engagement. Regular communication and innovative digital engagement is key to changing member behaviours and getting the UK ready for retirement.”
Aegon is gearing up to support both advisers and employers with member decision making as April approaches and will be launching a new website featuring an income planning tool and lifestyle calculator that will encourage employee engagement with their pension planning and provide a better understanding of their options at retirement.
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