More than half (53%) of UK employees are unaware of the 2012 pension reforms, which include the auto-enrolment of staff into workplace pension schemes, according to research by the Chartered Institute of Personnel and Development (CIPD).†
The Employee Outlook: Focus on pay and pensions survey found that the employees most aware of the reforms are those aged 55 and over (57%), and those aged between 45 and 54 (45%).
Just 31% of those aged 18 to 24 are aware of the reforms, and 40% of those aged 25 to 34.
Awareness is the highest in the private (46%) and voluntary (42%) sectors. In the private sector, those working in finance services are most aware (57%), followed by construction (54%) and professional services (50%).
Charles Cotton, CIPD adviser for performance and reward, said: “These findings suggest that both the government and employers need to take a nuanced approach to communicating pension reforms to employees.
“With less than a year and a half to go, employee awareness is generally quite low. From our survey we can see the greatest challenge to communicating the reforms is among the young.
“A more targeted effort in communicating the changes to this group is needed to ensure they understand how the reforms will directly benefit them.
“The danger is that a cheap and cheerful one size-fits-all communication approach could end up costing the government more in the long term through a lower understanding and appreciation of retirement savings.
“Enrolling people into a workplace pension scheme is just one element of helping people pay for their retirement. We also believe that a move towards a non-means tested flat-rate pension would be beneficial to all, particularly as the removal of the default retirement age begins to take effect.
“Workers, employers and the government all have an important part to play in the future of pensions.”
David Marlow, development manager at Creative Benefits, added: “The CIPD results highlight the vital need for employees to engage with pensions.
“There is a significant danger that many will simply go with the auto-enrolment flow and not make informed choices, resulting in: some saving when they may be better off directing their income elsewhere, such as repaying expensive debt; many not actively considering how much they need to pay in (to get the retirement income they want) leading to continuing shortfalls for retirees; and many not considering their investment choices, meaning many will miss growth opportunities or be invested in wholly inappropriate funds.”
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