This month has marked the final auto-enrolment staging date for small employers. With concerns that the current contribution level is not enough to produce an adequate level of income in retirement, Jonathan Watts-Lay, Director, WEALTH at work comments on what employers can do next.
Jonathan Watts-Lay, Director, WEALTH at work, a leading provider of financial education, guidance and advice in the workplace, comments:
“Recently the PLSA called for lifetime average contributions on all earnings of 12% a year and we would support that.
We would also like to see some form of auto-escalation, so when a member gets a pay rise they automatically increase the percentage they are paying until they reach a level that is likely to produce an adequate income.
Whilst AE has been a great success in getting people to save into pensions, if the member gets used to paying at 8% they may believe this is the ‘right’ number and not consider paying more.
Often employers will match to higher levels yet their default contribution is in line with AE requirements and members will and do miss out. Our experience is that there are many schemes where employees could take advantage of more ‘free money’ but don’t understand the benefits on offer.
Financial education can ensure employees realise how valuable workplace pensions are and highlights why opting out could be a mistake.”
Read more by Jonathan Watts-Lay here