10 Jul 2019
It’s not unreasonable to say that Automatic Enrolment has been a success with findings from the 2018 Department of Work and Pensions (DWP) evaluation report on the topic showing:
- As at June 2018, rates of opt-out / stopping contributions into a pension after the opt-out period have remained consistent with levels before the contribution increase in April 2018. Official data from the DWP state the opt-out rate is currently at 9%. Data for 2019 is still awaited.
- Since the start of automatic enrolment in 2012, more than 9.9 million workers have been automatically enrolled, and over 1.4 million employers have met their duties, with 591,000 workers having been automatically re-enrolled and 73,643 employers having met their re-enrolment duties.
- Findings from the DWP’s communications tracking research found that the majority of individuals interviewed viewed automatic enrolment as a good thing for them personally (82%); agreed saving into a workplace pension was normal for them (80%); and knew where to go if they wanted to find more about workplace pensions (83%).
We all know however that the current total contribution level of 8% (employee 5%, employer 3%) is clearly not going to be enough to provide a suitable and sufficient income in retirement for most people who may well have unrealistic expectations as to what their retirement income may look like.
Opinion circulating from leading pension industry heads have suggested that by 2030, the total minimum contribution rates could rise to 12% with a 50/50 split between employer and employee. As most employees are currently paying 5%, a jump to 6% (50% of 12%) is not too hard to find however a 3% jump for employers may mean that future pay increases are restricted.
Whilst these views are positive and the hope from the industry that the above opinion may be included in a potential pension bill later this year, the key to success around understanding pensions for the average person in the street is not to keep throwing money at the subject but through communication. Although providers are making massive strides in making pensions more engaging through development of online functionality, mobile phone apps and more legible annual statements, there is still much work to be done.
Many employers contract expensive specialist services with the hope that they deal with all aspects of their pension obligations. However, we believe at Wingate that the fundamental key to dealing with pensions for the benefit of employees is to deliver communications which take the complexity out of the subject, make it engaging and then once a base level of understanding and knowledge is in place, build up the expertise.
At Wingate Benefit Solutions we have tools to help employers engage with employees, all of which are tailored to an employer and employees needs. This could include face to face group presentations to staff, one to one ‘pension clinics’, online presentations together with clear and concise engaging guides in either hard or soft format. Should you wish to discuss these options, please do not hesitate to contact us on 01883 332260 or at firstname.lastname@example.org .