Just under half (48%) of respondents are not aware that auto-enrolment minimum contributions are increasing, according to research by Barnett Waddingham.
Its Generation Why report, which surveyed 3,000 employees, also found that 41% of respondents do not know what percentage of their salary they should be contributing to their workplace pension in order to achieve their required level of income in retirement.
The research also found:
- 17% of respondents do not know what auto-enrolment is.
- 9% of respondents contribute 16% of their salary in to their workplace pension.
- 12% of respondents know what funds their pension is invested in.
- 55% of respondents prefer to have flexibility in workplace pension schemes rather than a guaranteed retirement income and 28% would like to see more flexibility in the form of a savings account arrangement that is accessible throughout life. Only 13% of respondents would like to only have a guaranteed income from their pension.
- 38% of respondents accept responsibility for ensuring they have sufficient income in retirement rather than assuming that their employer, government or someone else has responsibility.
- 7% of respondents would approach their employer for financial advice or guidance.
- 43% of respondents think they will be able to retire before the age of 65; building a pension is the top priority for 51% of this group.
Damian Stancombe (pictured), head of workplace health and wealth at Barnett Waddingham, said: “It is well known that the UK has a retirement income shortfall problem. The immediate financial concerns of today are hindering financial wellbeing and stopping many planning for retirement. Having today under control gives us a better chance of understanding our needs for tomorrow, and also those of ‘one day’ when we enter retirement.
“The first step in this process of gaining control is to be aware of the state of our financial health and the one stat that stood out is that 97% suggest they are. Through involved education and planning [employees] can then be more certain of what is required in order to achieve [their] goals.
“A key theme throughout the research is that there seems to be a breakdown in the relationship between the employer and the employee. People are drowning in financial woes and the employer is not close enough to understand. But more than this, employees don’t trust the [organisation] they work for to help them or have their interests at heart. Instead of asking for help, they just wave. This will not be a missed opportunity if employers get closer to their people. Cross the divide, shorten the distance and [employers will] be able to support employees appropriately.
“Organisations need to support and encourage their employees in their efforts to deal with debt, day-to-day living and housing. This, together with pension provision and education should form the basis of a holistic workplace financial wellbeing strategy that will benefit both the employer and employee.”