Aviva research: Nearly a third of family heads pay into workplace pension

Nearly a third (28%) of the primary earners in UK families are paying into a workplace pension, according to new research from Aviva.

The second quarterly Aviva Family Finances Report revealed that 72% of family heads do not belong to a workplace pension because their employer does not offer one (43%), through choice (20%), through a lack of knowledge (11%) or ineligibility (4%).

Of those who chose not to, 40% stated that they could not afford to.

With the 2012 pension reforms looming, just 15% of respondents stated that they would choose to opt out when auto-enrolled.

However, the report suggests that significant education is needed about the benefits of auto-enrolment; 20% had no real thoughts on the issue and 12% were worried that it might not be for them.

A further 16% expressed concern as to how it might impact on their take-home pay.

Almost three-quarters (74%) of family heads would be happy to contribute to a scheme if their employer matched their contributions. Of the 74%, the most popular amount was 5% of annual salary, for 23% of respondents, followed by 2% and 3% of annual salary (10% and 3% of respondents respectively).

Paul Goodwin, head of pensions marketing at Aviva, said: “The UK is facing one of the largest pensions crises in Europe so it is vital that we consider what can be done now to help customers plan their retirements for the future.

“As the government has recognised by its planned auto-enrolment programme, workplace pensions have a significant role to play in meeting this challenge.

“There is much work to be done though as only 28% of UK family heads are currently paying into a scheme.

“And while many employees cite affordability as a reason for not joining, our research suggests that for many funds are available, but are often prioritised elsewhere.

“A lack of understanding around pensions is also seriously hampering take-up rates, so for the long-term interests of families in the UK, all parties concerned – the government, product providers, employers and employees themselves – need to work hard to ensure that auto-enrolment is a success.”

Read more on auto-enrolment and workplace pensions