Personal Pension  

Auto-enrolment workers paying less into pensions

Figures from the 26-page 2013 Scottish Widows Workplace Pensions Report found that the average UK worker intends to put less aside this year.

Although AE – launched in October 2012 – has already seen more than 1m workers successfully enrolled in a workplace pension scheme, the study of 5000 people showed there was still a lack of savings incentive.

Among those who are still to be auto-enrolled – roughly 8.6m people across the UK – the amount they are willing to save each month has fallen in every salary bracket, bar £50,000+.

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This amounts to a drop from £67 a month in 2012 to just £51 this year, and the overall amounts, while still above the minimum required contributions for AE, remain well below what is needed to match retirement aspirations, it added.

Even among those workers already paying into a defined contribution workplace pension scheme, the report found that a “significant shortfall” exists between the monthly savings that employees – and their employers – are making and their desired income in retirement.

Adviser view

Tom McPhail, head of pensions research for Hargreaves Lansdown, said: “This highlights the vital role that employers, advisers and pension companies have to play in helping employees to plan effectively for retirement.”

 Pension expectation gap amongst current Defined Contribution savers:

Annual Salary

Employee:

Average monthly contribution

Employer:

Average monthly contribution

Average monthly savings outside pension

Total monthly savings

Projected annual pension income

Desired annual pension income

 

Monthly Shortfall

 

 

£10k - £30k

£85

 

£75

 

 

£90

 

 

£250

 


£11,700

£22,800

 

£658

£31k - £50k

£186

£109

 

£228

 

£523

 

£16,300

£28,800

 

£740

Above £50k

£340

£187

£476

£1,003

£24,400

£43,000

£1,101

Average

£155

£109

£117

£381

£13,900

£25,200

£669