Apathy about retirement is driving nearly two-thirds of workers to support auto-enrolment into pension schemes, claims new research from B&CE Benefit Schemes.
A survey of 831 workers, carried out by TNS on behalf of B&CE, reveals one in four people are not making any provision for their retirement, with 21% saying they have not got round to it yet.
As a result B&CE says this display of apathy among the public is one reason for 64% of workers supporting the idea of auto enrolment, as it argues this approach takes advantage of inertia by making it easier to do nothing rather than something, such as opting out of personal accounts.
In addition, the survey findings reveal 90% of respondents agree pensions need to be made easier to understand, which B&CE suggests is another possible reason why support for auto enrolment is so high.
B&CE also suggests support for auto enrolment would be even higher if more people knew about the tax incentives available to those who save for a pension, although the research shows 49% of people are unaware of these incentives.
The new system of personal accounts - scheduled to be introduced in 2012 - intends to use auto-enrolment to target low to median earners not saving for retirement and will require a monthly 4% contribution from employees from banded earnings, a compulsory 3% from the employer and 1% in tax relief from the government.
And despite suggestions the 4% employee contribution might be too high, the research from B&CE reveals only 14% of respondents say will not be able to afford the 4% monthly contribution, although out of these 59% said they would simply have to get used to it.
John Jory, deputy chief executive of B&CE Benefit Schemes, says the support for auto enrolment maintains its assertion that every effort needs to be made to make saving for retirement easy and accessible for everyone.
He adds: “It is encouraging to see workers want to act responsibly and want pensions to be easy to understand. But it is alarming to see the percentage of individuals who are unaware of the government incentives currently available to them. Our results indicate there is still a lot of work to be done in communicating the tax advantages in saving for a pension.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7034 2681 or email [email protected]IFAonline
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