By Max Clarke
Nearly six in ten (56%) employees worry that they are not saving enough for their retirement and over half (54%) are not members of a workplace pension. These are the top line findings of Employee Outlook: Focus on Pensions, a survey from the Chartered Institute of Personnel and Development (CIPD) of over 2,000 employees.
The survey reveals the high proportion of workers who are not saving into a company pension scheme, with private sector workers particularly (65%) in this position (compared to 40% and 12% in the voluntary and the public sector respectively). It highlights the need for Government to work with employers to communicate the forthcoming 2012 auto-enrolment pension changes.
Further worrying findings are exposed among private sector employees who already belong to a company pension, with around one—fifth (18%) not knowing how much their employer is contributing on their behalf. However, this percentage is far higher in the public sector, where 59% are unaware of their employer’s contribution (compared to 27% in the voluntary sector).
The survey also tracked whether employees were aware of how much they contributed to their own pension scheme. Almost three in 10 (27%) public sector workers are unaware of their own contributions, compared to 11% in the private sector and 16% in the voluntary sector.
Just three in ten (30%) of all private sector workers say that a pension scheme is a consideration when looking at their next job move, compared to 67% in the public sector and 55% in the voluntary sector.
Charles Cotton, reward adviser, CIPD said: “Firms are facing a huge challenge in light of 2012 auto-enrolment. It is crucial that the Government supports employers’ efforts to communicate to employees the implications of these changes. If not, we will continue to sleepwalk into a pensions’ crisis.
“There is a real danger that, without Government support, 2012 auto-enrolment will prove to be a missed opportunity in achieving a step change in the uptake of pensions.
“In the public sector, where pension membership is already high, the challenge for employers is to communicate to employees how much they are contributing to these schemes. From April 2012 public sector employees will find their own contributions increasing by on average 3%, as announced in the autumn 2010 Comprehensive Spending Review. If public sector staff recognise and value the contribution their employer makes to their pensions, they may be more prepared to see their own contributions rise at a time of pay freezes and increasing living costs.”
Among those not in a scheme, affordability concerns are an issue, especially against a backdrop of rising prices and falling living standards. However, the survey does indicate that some employees may be able to overcome these worries if their contribution rates are gradually phased in over time.
The survey also asked workers who were worried about not saving enough for retirement what would encourage them to save more:
• 44% of employees said knowing the size of the pension pot they would have to achieve in order to retire comfortably
• 39% said information or advice about the amount they would need to save each month in order to retire comfortably
• 28% say regular updates about the value of their pension
• 19% say a better understanding of their employer’s pension scheme
• 17% say being automatically enrolled into a workplace pension, rather than being asked if they wanted to join