The amount that the average employee is willing to contribute towards their retirement savings through a pension scheme has dropped by almost a quarter (24%) in the last year, according to research by Scottish Widows.
The 2013 Scottish Widows Workplace pensions report, which surveyed more than 5,000 employees, found that, among those who are still to be auto-enrolled, the average amount they are willing to save each month has dropped from £67 in 2012 to £51 in 2013.
Awareness of auto-enrolment has increased from more than a third (39%) in 2012 to almost two-thirds (65%) in 2013. However, only one in five (21%) of respondents on an annual income of less than £30,000 are still not aware of the legislation.
The research also found that 28% of those who have been auto-enrolled are unaware how much they contribute, while 44% of respondents who are paying into their workplace pension scheme do not know how much their employer contributes.
It also found:
- 94% of respondents believe their employers should give them some form of guidance around finances in retirement, up from 74% in 2012.
- 57% of respondents think their employer should provide general information about retirement planning, in addition to providing a workplace pension scheme.
- 37% of respondents think their employer should provide full financial advice.
- 18% of respondents would go to their employer for advice about pensions, while 21% would go to their pension providers.
- 25% of respondents would consult an independent financial adviser.
Lynn Graves (pictured), head of business development, corporate pensions at Scottish Widows, said: “We cannot ignore the fundamental correlation between poor employee awareness of the scheme and the lack of understanding of the realities of retirement. The alarming fall in the amount that employees are willing to contribute only serves to highlight this.
“Auto-enrolment is a vital tool for improving savings behaviours, but it cannot work in isolation to change the nation’s attitudes to retirement. The pensions industry, government and employers have to educate the UK workforce about the importance of saving adequately for retirement, and how their workplace pension scheme can help them to be comfortable in old age.”