72% of workplace savers want their pension to reflect their choices
Interest in choosing retirement age, retirement income method and investment fund
44% pay more to get more from their employer
The research found that almost three quarters (72%) of people expressing an interest in personalising some or all aspects of their pension to suit their individual needs.
When it came to contribution levels, 62% of employees currently save more than the auto-enrolment minimum contribution of 1% of salary. Of those who paid more, the incentive of additional free money from their employer prompted 44% to increase their contribution and benefit from their employer contributing more. Nearly a third (30%) recognised that the minimum contribution was too low to build up a meaningful pension and are helping deliver the sort of pension they want by saving more.
While the majority of individuals initially invest in the default fund, 71% expressed an intention to make a more active choice at a later stage to suit their own retirement objectives.
Beyond the basic savings options, the research found a number of other ways in which people intended to personalise their pension and retirement plans. When it came to retiring, nearly 4 in 10 (38%) expected to still be working after age 65 showing people are less likely to retire just because they have reached state pension age.
And reflecting trends seen amongst recent retirees, only 15% said they’d opt for the certainty of what used to be the automatic choice, an annuity. In contrast, nearly three in 10 (29%) expected that they would select an income drawdown option that would provide a flexible income while their funds were still invested. The remainder were unsure showing more needs to be done to help people understand the new pension freedoms.
Steven Cameron, director of pensions at Aegon, said: “Automatic enrolment has been a big success in getting more people saving, but as it relies on inertia, there is a risk individuals just go along with the ‘default’ contribution levels and investment funds and assume they’ll work until state pension age.
“It is often suggested that people, particularly if auto enrolled, fail to engage with their pension or take active decisions, but our research offers a very different and promising perspective.
“Only one quarter of people say they are happy to go along with whatever their employer or the Government decided with the remaining wanting to choose all or certain aspects of their pension. It’s great to see that many appreciate they don’t have to take a one-size-fits-all approach to pensions and making choices more suited to their individual circumstances will help give them the retirement they aspire to.
“Our findings show just how powerful employers can be in driving good savings behaviour. The most popular reason for paying in more than the minimum contribution is if their employer matches contributions made by them.”
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