Half of all corporate financial advisers believe that the largest proportion of employees opting out of workplace savings schemes post auto-enrolment will be in the 35 and under age group, according to research by Aviva.
In an online survey of financial advisers, Aviva found more than half of respondents think that up to 30% of UK workers could opt out of the new auto-enrolment regulations, which will be introduced from October 2012.
The majority (98%) expect some degree of opt-out, while 20% believe that half of all employees will drop out, 59% predict a 30% drop-out rate, and only 2% think there will be no drop out.
Respondents believe that among the 35 and under age group, many workers cannot afford to save, as cited by 80%, while 72% said they have other financial priorities.
In addition, 69% believe this group thinks they are too young to worry about their retirement, 63% do not think they trust pensions and 47% said they do not think younger employees understand the benefits of a workplace pension compared to other kinds of saving.
More than half (55%) of corporate advisers believe a workplace pension scheme is still the most attractive way for younger workers to save.
A further 34% said other savings vehicles such as individual savings accounts (Isas) and share schemes, either offered by their employer or set up privately, are the next most popular mode for saving for the long term, and 2% suggested a compulsory pension scheme could be the way forward.
More than half of advisers believe they are actively doing something specific to encourage younger workers to save in the workplace through the provision of information on the benefits of a pension scheme (58%), offering financial planning sessions (55%), or actively encouraging communication between employers and employees (40%).
Paul Goodwin, director of workplace savings at Aviva, said: “It is good to hear that four in ten (40%) advisers are actively trying to stimulate open communications between [employers] and their employees but, more must still be done to minimise the predicted level of opt out figures.
“It is apparent there is still quite a gap between the information that is given to [organisations] and what employees actually feel they receive.
“It is up to us as an industry to work alongside the Pensions Regulator to not only ensure the successful implementation of automatic enrolment, but make sure that employees know the options available to them, the benefits of a workplace scheme and what the consequences of opting out will have on their future lifestyle.”
Read more articles on auto-enrolment and the 2012 pension reforms
