Around 10 million workers will be automatically enrolled into a work place pension scheme in October of this year, but a new survey has found that the majority of people are not aware of the imminent changes.
The government’s auto enrolment program start’s in October and will see employees of larger firms be the first to be automatically enrolled into a work place pension. However, a survey from the pension provider Aviva, found that 68% of workers were unclear about the changes.
Under auto enrolment workers who are not currently a member of a work place pension, perhaps because they decided not to join or because no scheme is in place, will be automatically enrolled into a scheme to which they and their employer must contribute.
Whilst employees can opt out, having been automatically enrolled, the government hopes the scheme will encourage more people to save for their retirement. The government believes that between two and four million people will opt out of the scheme, leaving between five and eight million people joining a pension for the first time or making additional provision.
The survey found that only 43% of people who are automatically enrolled will definitely stay in the scheme, with 37% saying they will opt out and 21% still undecided.
The main reasons given for opting out were lack of disposable income, debt and other immediate family needs.
“Consumer awareness gap”
Aviva surveyed 2,000 workers and 200 employees in its ‘Working Lives’ report and said that the “consumer awareness gap” needs to be overcome if the scheme is to be successful.
Aviva spokesman Graham Boffey said: “The simple fact is that people are not saving enough for their retirement. [But] when the first companies start to automatically enroll their employees in October we can’t expect an immediate step-change in how people save.”