By Marcus Leach
The opportunity to benefit from employer contributions remains the single biggest reason for people to stay ‘auto-enrolled’ in new workplace pension schemes, according to latest research from the Association of British Insurers (ABI).
The findings come as the Government announces a clear timetable for the roll-out of auto-enrolment.
The ABI consumer survey suggests the introduction of auto-enrolment from October could not come fast enough for many as a way of bringing them out of the ‘savings stalemate’.
Not missing out on employer pension contributions (47%) and on tax relief from contributions (14%) were the most popular reasons encouraging people to remain ‘opted-in’ to workplace schemes. This clearly shows that people see the value of their money being made to work harder by the extra top ups they will get from their employer and the Government.
Overall, more than half (53%) of people not already in a company pension scheme say they will remain ‘opted-in’ when their employers begin automatically enrolling them in eight months’ time, and this comes before any significant promotion of the new scheme. With a further 30% of people still undecided, we could see even more remaining ‘opted-in’ and saving for their future.
A similar scheme in New Zealand has seen the amount of workers saving for their pension more than double, with more than half of the country’s working population now enrolled. The UK could see even higher figures as its auto-enrolment arrangements will cover all eligible workers, rather than only those who are changing jobs or just starting work.
“It’s encouraging to see a significant amount of people already recognising the value of the incoming auto-enrolment into pension schemes and we are pleased the Government has announced a clear timetable for its roll-out," Maggie Craig, Acting Director of Life, Savings and Protection at the ABI said.
"Around half of workers are either not saving into a pension or not saving enough, so auto-enrolment will give many people the much needed nudge to save for their retirement and break the ‘savings stalemate’.
"Whilst current financial pressures can mean building up a sufficient pension pot often gets put on the backburner, people should not ignore the opportunity to benefit from employer contributions and tax relief on their own contributions.”
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