More than half (53%) of workers are “totally unaware” that they will be auto-enrolled into a pension plan as part of pension reforms due to come into force next year.
According to the Chartered Institute of Personnel and Development’s (CIPD) quarterly employee survey, workers aged between 18 and 24 are the least likely to be aware of the changes, which are set to come into force in October 2012. Fewer than one-third of private and voluntary sector workers in this age group are familiar with the auto-enrolment aspect of the pension reforms.
Knowledge of the introduction of pensions auto-enrolment increased with age, with 45% of 45- to 54-year-olds and 57% of workers aged 55 or above aware of the changes.
Charles Cotton, CIPD adviser for performance and reward, said: “These findings suggest that both the Government and employers need to take a nuanced approach to communicating pension reforms to employees. With less than a year and a half to go, employee awareness is generally quite low.
“From our survey, we can see the greatest challenge to communicating the reforms is among the young. A more targeted effort in communicating the changes to this group is needed to ensure they understand how the reforms will directly benefit them. The danger is that a cheap and cheerful one-size-fits-all communication approach could end up costing the Government more in the long term through a lower understanding and appreciation of retirement savings.”
Cotton added that, alongside auto-enrolment, a non-means-tested, flat-rate pension would be beneficial to all, particularly as the removal of the default retirement age begins to take effect.
The survey also found that three-fifths (59%) of workers were worried about paying for their retirement, with 65% of women anxious about funding retirement compared with 53% of men.