A recent survey by workplace pension provider Now: Pensions has found that 38% of UK workers who have opted out of auto enrollment workplace pensions have done so because they cannot afford the required employee contributions. The survey also found that 16% of those polled who are currently enrolled, plan to opt in because of the mandatory contribution increase that kicked in last week
As of April 6, nearly 5.6 million auto-enrolled savers saw their required minimum contributions more than double to 5% of qualifying earnings from 2%. The survey found that only 64% of auto enrolled savers were aware of these increases to minimum contributions, with 84% saying they will stay in the pensions despite the changes. And just over half (51%) of those polled said they would have liked the opportunity to save into their workplace pension earlier. Now: Pensions’ research also found that 60% of those surveyed believe it’s important to save into a pension for a more secure future, with 23% saying that their employer contribution is too valuable to pass up.
“While knowledge of these rises is good with 64% aware of the changes, it is clear that more needs to be done, as just under half (48%) of respondents say they wish they had better understanding of workplace pensions,” said Now: Pensions in a release.
Among those polled who have chosen to opt out, 24% said they did so because the amount paid into the pensions is too small, and therefore don’t see the point in saving into their pension, while nearly one in five (19%) say they simply don’t trust pensions.
According to Now: Pensions, 9 million people have been auto enrolled, and 62% of those surveyed say they are paying the minimum. The survey was conducted by Opinium Research on 1,552 UK working adults aged 22 to 65 who have a pre-tax personal income of more than £10,000 ($14,200).
To be eligible for automatic enrollment, UK workers must be at least 22 years old, and under state pension age, earn more than £10,000 a year and work, or usually work, in the UK. Minimum contribution levels were introduced starting at 2% with a minimum of 1% from employers, and 0.2% from tax relief. In April 2019, the minimum will increase again to 8% (3% from employer and 1% from tax relief).