Legal & General Workplace Savings has revealed the findings of new consumer research into how many employees are likely to opt out of the auto enrolment process.
The research*, which was completed in July, asked 107 people who qualify for auto enrolment (AE) whether they would stay in a company pension scheme or opt out after they had been given a description of the AE process.
Would you stay in the auto enrolment process or opt out?
The results were as follows:
Opt Out - 33%
Stay In- 46%
Don't know - 21%
These results indicate a slight improvement compared to a similar study that was done when the Government announced its plans for Personal Accounts (in August 2007).
Legal & General asked 432 consumers who would qualify for a Personal Account, whether they would stay in or opt out of their workplace pension. Then 37% were likely to opt out (higher among men = 42% than women = 30%), 44% were likely to stay in while 19% could not make up their mind (don't know).
Legal & General's Operations Director Workplace Savings, Ian Mahoney commented: "Our research shows that the proportion of the workforce that are likely to opt out of the auto enrolment process when it kick starts in October 2012 has not changed much in the last four years. This is despite a significant level of publicity around the launch of the National Employment Savings Trust and the run up to the start of auto enrolment by the DWP. We found that awareness among employees who are eligible for auto enrolment is quite low with less than a third (29%) saying they had heard anything about it.
Interestingly - even among those who seem to be aware of AE there is confusion about what it means - many think AE only applies to those who have no pension provision at all. Hardly anyone is aware that staying in the AE process means signing up to a minimum contribution from their current salary."
In depth interviews** completed by Legal & General among employees who are not yet signed up to their company pension, indicated many of the respondents without a pension viewed AE as a much needed ‘nudge' to start saving. The in depth research found that the youngest age group, those between 22 and 30, would be the hardest to engage with on pensions and may be most likely to opt out. Older staff, aged 30 to 40 years, who are not yet members of the company scheme are likely to be nudged into an ‘opt in' decision. The respondents in the oldest age group, the 50s and 60s, said they would be more likely to opt out and rely on the state pension.
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