Pension scheme members with AXA will have their contributions automatically increased in a bid to remedy a lack of engagement with their policies.
The Save More Tomorrow service, available on AXA’s Group Personal Pension and Group Stakeholder products, automatically increases member contributions by an agreed percentage at set time periods for the duration of the plan.
AXA says the move aims to address the issue of participation versus engagement in group pension schemes and says an example increase would be from 5% in year one to 8% over three years.
It points to research suggesting around seven in ten pension plan members think the amount they are saving is too low.
The Save More Tomorrow proposition is agreed with the pension member at the outset and automatically increases their contribution without any further action or decision making required. It says increases can be arranged to coincide with key dates, like pay rises.
Mark Rowlands, head of corporate partnerships at AXA Corporate Benefits, says: “We have carried out extensive research around behavioural finance and were not surprised to find a lack of action and high levels of inertia when it came to planning and investing into a pension.
“People don’t tend to engage with their pension scheme and often forget about it after they’ve made the initial decision to join.
“Although automatic enrolment has been successful in increasing participation by overcoming inertia it hasn’t addressed the issue of people remaining at the low default savings rate that they initially join the scheme on.
“By automatically increasing contributions, we are helping people to increase their pension pot to deliver a better income in retirement.
“The real beauty of this enhancement is that the increases can be arranged to coincide with key dates, like pay rises, so that employees don’t feel the pinch of a decrease in income.”
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From 6 April 2019