This article has been supplied by Scottish Widows
The 2013 Scottish Widows Workplace pensions report found that low levels of staff understanding around pension contributions, both in terms of their own and their employer’s contributions, has led to a fall in the amount UK workers are prepared to save into their workplace pension.
According to the report, the amount employees are prepared to save has dropped 24% since 2012.
It also found that 28% of respondents who have been auto-enrolled are unaware how much they contribute, while 44% of respondents who pay into a pension do not know how much their employer contributes.
However, on a more positive note, the research found that 55% of respondents chose to pay into their workplace pension scheme over other savings products because their employer is also making contributions.
Lynn Graves, head of business development, corporate pensions at Scottish Widows, said: “People are becoming increasingly aware, but there is a disconnect between knowing they need to do something and that auto-enrolment is coming, and actually realising how much they need to put into a scheme.”
When auto-enrolling its employees from October 2012, Which? altered the structure of its pension contributions so staff in their first year of employment receive slightly above the minimum required by auto-enrolment legislation. After a year, this will rise to the consumer organisation’s pre-existing pension contribution level.
Auto-enrolment and the change to pension contributions were communicated to staff alongside Which?’s total reward strategy.
Trevor Rutter, benefit communications consultant at communications firm Like Minds, said: “Employers should consider talking to people in languages they understand. Sometimes percentages can be confusing. To talk about ‘you pay 1%, I pay 2% and you get tax relief’ is going to leave people cold. A good starting point is to talk in cash terms. People understand money and it brings it down to an everyday reality. It’s making it accessible to people.”
Graves added: “We have relaunched some of the marketing support we give to employers. A lot of that is around trying to make it relevant and tailored to the workforce we’re talking to. We try to make it as relevant as possible in terms of how we support employers to communicate, since that helps with engagement.”
