By Daniel Hunter
Around two in three employees are now aware of the government’s automatic enrolment pension scheme, up from just two in five last year, according to Scottish Widows.
Automatic enrolment was introduced to encourage workers to save for their retirement. It is being rolled out to all employees over the next five years, starting with the biggest employers first — those with 250 employees or more.
Employers must ensure that a pension fund is equivalent to at least 2% of individual members of staff’s salary. Employees put 0.8% into the pot, with the remainder being provided by the employer, including 0.2% from tax relief. The 1% employer contribution can be increased in line with company policy. However, employees can opt out of the scheme if they’d prefer to set up their own long-term savings plan.
"Auto-enrolment is a vital tool for improving savings behaviours, but it cannot work in isolation to change the nation's attitudes to retirement," said Lynn Graves, head of business development, corporate pensions, at Scottish Widows.
"The pensions industry, government and employers have to educate the UK workforce about the importance of saving adequately for retirement, and how their workplace pension scheme can help them to be comfortable in old age."
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