Pension reforms increase retirement engagement

JonesTim-Nest-2013

The new pension flexibilities, which are due to come into effect in April, are resulting in more people becoming switched on to retirement planning, according to research by the National Employment Savings Trust (Nest).

Its Nest insight 2015 report, which surveyed a representative sample of 2,000 workers, found that approximately a third (34%) of respondents will think about their retirement plans sooner because of the Budget changes.

It also found that some 29% of respondents plan to pay more into their pension as a result.

Younger employees are more engaged with the reforms, with two-fifths (40%) of 22-30 year olds citing that they will start to think about what to do with their retirement income sooner due to the new options open at retirement.

A further 36% are more likely to increase payments into their pension as a result.

However, only 48% of respondents are aware of the new pension flexibilities available to defined contribution scheme members, which come into force in April.

For the second consecutive year, saving for retirement ranked third in importance on repondents’ saving priorities, coming behind holidays and saving for a rainy day.

It also found that support for auto-enrolment is continuing to grow with more than three-quarters (77%) of respondents agreeing it is a good thing, up from 68% in 2013 and 63% in 2011.  

Tim Jones (pictured), chief executive officer at Nest, said: “It is hugely positive to see that pensions are becoming embedded as a national priority.

“Until recently, millions of people were not saving for retirement. Auto-enrolment and now the new pension freedoms have changed all this, reform is leading to a pension revolution.

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“Five million more people are now saving for their future and support for auto-enrolment continues to grow, even among those who have so far opted out.

“It shows just how far we have come. Saving for later life is fast becoming the ‘new normal’ which is fantastic news.”