Most consumers welcome automatic enrolment despite affordability pressures, an insight report launched by the National Employment Savings Trust has revealed.
The 60-page report, Nest Insight, which draws on five years of research and evidence, also found 67 per cent of people believe auto enrolment will mean they can stop worrying that they have not done anything about retirement.
However, the report highlighted that employers may not be giving themselves enough time to get ready, with fewer than half of employers with fewer than 5,000 workers confirming their provider to date.
Employers have highlighted administration, pension scheme choice and how to communicate the changes to their workforce, as top of their list of concerns.
Tim Jones, chief executive at Nest, said: “A fear of making the wrong decision has put many people off joining a pension in the past. However, the knowledge that their pension is being taken care of through a low-maintenance approach driven by their employer gives savers peace of mind.”
Mr Jones added employers need to give themselves enough time to get ready – about 18 months ahead of their staging date.
Allan Maxwell, director of Glasgow-based Corporate Benefits Consulting, said: “The larger employers that have had some form of pension provision in the past are set up fairly well for this.
“But at the smaller end of the market the businesses that aren’t going to auto enrol for the next couple of years, there is still huge ignorance out there.”
Tom McPhail, head of pensions research for Bristol-based Hargreaves Lansdown, said: “Despite DWP’s [department for work and pensions] efforts to simplify the process, most employers will need help in complying with the legislation.”
The report came a few days after the department for work and pensions’ consultation on lifting the restrictions on Nest finished.
Advocates of lifting the limits include shadow pensions minister Gregg McClymont. However, Kate Smith, regulatory strategy manager for Aegon, warned that removing the cap brought its own dangers.
She said: “We must not be fooled into thinking Nest is suitable for everyone. It is not. It has not been designed for higher earners. The default fund is cautious and risk averse, built for the neesds of a carefully considered target market, not for higher earners who may want more flexibility.”
Helen Forrest, head of policy and advocacy at the National Association of Pension Funds, said: “It is good news that this report confirms consumer appetite for auto-enrolment even in these challenging economic times. This corresponds with our own survey that shows that two-thirds of employees will stay auto-enrolled.
“It is crucial that firms are prepared for these changes and are choosing good quality schemes for their employees. Encouragingly, our recent annual survey shows that two-thirds of employers have already chosen the scheme they will use and that a third have an employee communication plan in place.