Employees happy they are forced into pensions

Employees happy they are forced into pensions

Workplace pension saving has become the new normal for four in five employees in a fresh sign of the widespread success of auto-enrolment,  according to research published by the Department of Work and Pensions (DWP).

The study, conducted by Ipsos Mori, showed 80 per cent of employees are positive about the benefits of being enrolled into a workplace pension.

In addition 79 per cent of those with workplace pensions would welcome increasing their savings alongside employer contributions.

Article continues after advert

David Gauke, secretary of state for work and pensions, said auto-enrolment had been a "huge success" in helping millions more people save into a workplace pension.

Last week The Pensions Regulator announced that 8.3m people have been automatically enrolled onto a workplace pension by nearly 700,000 employers across the UK.

Mr Gauke said: “These figures underline the fact that saving for a pension has become the new normal with people from all walks of life embracing it.

"A private pension should not be a privilege, it should be something that the vast majority can work towards to complement the state pension in later life."

Jamie Clark, pensions business development manager at Royal London, said these figures were “encouraging”.

“However, if the millions of people who have been auto-enrolled want to aspire to the same levels of income that current retirees enjoy, they need to be ‘nudged’ to save more.

"The future 8 per cent total contribution rate is nowhere near the 20 per cent plus total contribution that previous generation of pension savers were receiving,” Mr Clark said.

He added that employees’ contributions should increase gradually, perhaps in line with pay rises, which could lessen the impact.

“Employers can also play a part by increasing their contributions, or by allowing workers to sacrifice part of their salary or bonus in favour of pensions,” he noted.

The government currently reviewing how to continue to build on automatic enrolment and how to encourage as many people as possible to save into a workplace pension. The review will report to Parliament by the end of 2017.

Debbie Abrahams, Labour's shadow secretary of state for work and pensions, welcomed the result of the research.

But she said more work was needed to make sure self-employed people, carers and people with multiple jobs are enrolled into workplace pension schemes.

She said: “The government review into auto enrolment must ensure it provides feasible options for all."

Auto-enrolment was officially launched in October 2012 and by 2018, when the roll-out is complete, it is expected that up to 11m people will be newly saving or saving more as a result.

The government has previously announced that the minimum automatic enrolment contributions will increase to 5 per cent in 2018 and 8 per cent in 2019.

A total of £17bn a year will be going into workplace pensions by 2019 to 2020 as a result of auto-enrolment.