Workers unaware of pension changes
Seventy per cent of employers are aware of pension reform changes, but 68% of employees have little or no knowledge of automatic enrolment yet, according to a survey by Aviva.
Its first Working Lives Report also shows that 43% of employees currently without a pension said they would remain in a scheme once they were automatically enrolled – but it suggests opt outs could be significant. This is despite the fact that more than half of employees agree pensions are the best way to save for retirement. Some 55% without one say they simply don’t have the money either because they are repaying debts or because of immediate family costs.
The survey also shows that employees are most concerned about how their pay compares to the cost of living, while employers worry most about keeping up with the competition and, although they recognise their workers are critical to their business success, over a third (39%) are looking to motivate them without ‘unduly increasing pay’.
Overall, however, UK employees seemed to be generally happy in their work – with 27% saying they really enjoy their work and 45% saying they quite enjoy their work.
Against a backdrop of economic uncertainty, the vast majority of UK private sector employers (96%) surveyed said their employees were absolutely critical to the success of the business. And overall, UK employees seemed to be generally happy in their work – with 27% saying they really enjoy their work and 45% saying they quite enjoy their work. With only months to go before the start of automatic enrolment, many companies (43%) said they were already preparing for the changes they would need to make. However, most employees seem unaware of the changes coming up.
Opt out rates from automatic enrolment are also potentially significant, says the report, with employers thinking that the typical percentage of employees opting out will be 33%, and a similar number (37%) of employees saying they may choose to leave. But 43% of employees currently without a pension said they would remain within the scheme once enrolled, and of those 8% said they would contribute more.
The survey also showed broader workplace benefits are increasingly coming to the fore as employees seek help in bridging the cost of living gap. The top five benefits valued by employees (and which they are offered) are: annual bonus (36%), pension (16%), health insurance (15%), life insurance (14%), and non financial benefits (14%), such as discounts on products, subsidised gym membership and crèche facilities.
Aviva’s managing director of corporate benefits Graham Boffey said: “Aviva is a long-standing advocate of automatic enrolment, but we recognise that Britain’s employers are facing the significant challenge of transforming the way they provide pensions and workplace benefits at a time of continuing economic uncertainty.
“When the first companies start to automatically enrol their employees in October this year, we can’t expect an immediate step-change in how people save for their retirement – employers and the industry will need to make a long-term commitment to ensuring it’s a success.
“Companies are increasingly going to need to find relevant and compelling ways to talk to their employees about their savings and benefits options. And as more people start to use the workplace for managing their money, practical planning tools and clear guidance will be essential.
“While the time, resources and commitment being called for from employers over the next few years should not be under-estimated, there are clear benefits for those who really understand what savings and benefits their employees value, and importantly, how best to discuss them in the workplace.
“Employers willing to put in the time and effort will find themselves in a win-win situation. Broader workplace savings and benefits are a cost-effective way of boosting employees’ total packages beyond basic pay, and we know employees want additional and more relevant benefits that help them make the most of their money.
“While Working Lives shows some areas for concern, there are equally positive signs that employers and employees are willing to embrace this period of workplace change and in doing so they will help to re-invigorate Britain’s savings culture.”