As the UK's largest employers get ready for the start of auto-enrolment in just three weeks' time, the Scottish Widows Workplace Pensions Report 2012 reveals that over half (56 per cent) of Scottish workers are completely unaware of the impending changes, despite an increase in the average amount people are willing to save for retirement.
Auto-enrolment will initially see employees of the UK's biggest companies automatically entered into their workplace pension schemes and will extend to all other employers over the next five years. Despite this large-scale roll-out, the annual report from Scottish Widows found that the majority of workers display an alarming lack of awareness of this new legislation.
Worryingly, of those who are aware of auto-enrolment, only one in five Scots (19 per cent) found out about the changes from their employer. Instead, over half (57 per cent) say they found out through the news and media, showing the clear need for more communication and education from employers and the government.
Lynn Graves, Head of Business Development, Corporate Pensions at Scottish Widows, commented: "With just three weeks to go until auto-enrolment comes into force, it is shocking that there remains such a huge gap in awareness, and that the media has had to step in to play a pivotal role in educating people about these changes. Auto-enrolment is designed for people who traditionally don't have access to a workplace pension scheme, such as smaller employers or those with lower incomes, and it is clear that information is still not reaching the audience it's intended to target. Educating these employees needs to be a top priority for the industry and the government."
Expected contributions double in just 12 months
In spite of the lack of knowledge about auto-enrolment, those who are aware of the scheme are overwhelmingly in favour of it, with only 13 per cent of Scottish workers planning to opt out.
In a further sign that Scots are taking increasing responsibility for their retirement, the amount that workers are willing to pay into their workplace pensions has more than doubled since last year from £38.90 month to £93.36, revealing a substantial shift in understanding of the levels of payment required. However, even based on this increased level of contribution, 35 per cent of those in Scotland believe that it won't be enough to provide them with an acceptable standard of living in retirement, proving that auto-enrolment can only go so far in fixing the nation's lack of savings culture.
Lynn Graves continued: "It is clear from our research that people are failing to save enough for their future especially in relation to retirement. While it is a positive sign that people are willing to pay more into their workplace pension, substantial work must still be done to encourage people to save enough for retirement and this is a challenge for government, the pensions industry and employers. As a nation we are slowly waking up to the reality of how we are going to be able to fund our retirement, many people recognising that they can't solely rely on the State to provide the majority of their income in old age."
Employers face pension pressure point
This year's report shows that workers have high expectations of their employers, with 73% of Scottish employees believing that the workplace should give them full financial advice and information on retirement planning. Further illustrating the importance of these financial benefits, over half (54 per cent) of Scots said that their employer's pension scheme was an incentive to stay with the company.
In order to deliver on this expectation the industry has to create innovative solutions which help employers comply with auto enrolment and enable workers to better plan how much they need to save for retirement.
NEST comments on Scottish Widows Annual Workplace Pensions Report
Commenting on the annual Workplace Pensions Report by Scottish Widows released today, Tim Jones, Chief Executive Officer, NEST, said:
‘It is encouraging that so few people are planning to opt out of their workplace scheme once enrolled. However, we also know that nearly nine in ten workers check every single payslip and will want to understand why it contains a new deduction. There is a risk some people will opt out when it may not be in their interests if this comes as a surprise.
‘It is vital that people think about why tomorrow is worth saving for and what they could lose if they opt out. The messages they receive from employers and the industry about automatic enrolment must be clear, simple and constructive to help people make informed decisions that are right for them.'
To View the Workplace Pensions Report please click below:
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