New research from insurer AXA suggests 28% of UK employees have not joined or will not join their company pension schemes and could collectively be missing out on up to £3bn in additional pension payments.
This represents about 5.1 million UK workers who, despite being entitled to join a company pension plan, fail to do so even though many employers will contribute to pension funds on their behalf.
The survey found that 63% of employees who are members of company schemes are aware that their employer pays into the fund on their behalf.
A quarter of company pension scheme members say their employer pays matching contributions of between 5% and 10% of their salary into the fund, while just over one in ten get more than 10% of their annual salary paid into a pension pot by their employer each year.
However, 30% said they don’t know if there is an employer contribution to their pension scheme.
Despite these incentives, 28% of British workers who have failed to join company pension schemes said nothing would encourage them to do so. Moreover, 13% said they have no faith in pensions anyway.
Meanwhile, only 2% believe they will be able to rely on the state pension to provide an adequate retirement income, compared to 55% of company pension scheme members who are confident their pension scheme will fund a comfortable retirement.
According to Axa’s Mark Rowlands the State pension is unlikely to provide a sufficient income to enable most people to enjoy a comfortable retirement.
By failing to join company pension schemes UK workers are losing out financially – a conservative guess, according to Rowlands, being £3bn per year but probably significantly more.
Of those who have failed to pay into occupational pensions, 11% said they could not afford to join, 7% said there was no point as they were too old and a further 7% said they either did not know how to join or had received no information.