Less than one in 10 (9%) respondents opt to pay at least part of their bonus into their workplace pension, according to research by Aviva.
Its survey of 2,012 UK adults also found that 24% of respondents are aware of the tax advantages of paying their bonus into their workplace pension under a bonus exchange arrangement, rather than taking it as cash.
The research also found:
- 39% of respondents who have received a cash bonus spend it on a treat, such as shopping or a holiday.
- 38% of respondents who have not received a bonus believe they would spend it on a treat, and 6% think they would pay it into their pension.
- A third (33%) of respondents would opt to pay at least part of their bonus into their pension after being informed of the tax advantages of bonus exchange arrangements, and 27% would still prefer to take their bonus as cash.
Colin Williams (pictured), managing director of workplace benefits at Aviva, said: “We live in a world of instant gratification. We want something now, not later, and to some extent that it understandable. But it’s clear that a large number of people are missing out because they don’t understand how pensions work.
“Tax relief along with an employer pension contribution are the two biggest reasons to pay into a workplace pension. If people don’t recognise the value of these then they are not able to make an informed choice when they are offered a bonus. This knowledge gap is creating a savings gap.
“Over the years, paying at least part of a bonus into a workplace pension could have a really positive impact on someone’s retirement. Ensuring that consumers have a good understanding of their pension is hugely important. Our research shows that people are much more likely to save for their retirement if they have a clearer understanding of the benefits of contributing to their pension.”
