Today’s introduction of pensions auto-enrolment will enable millions of people to save for their retirement and will help to reverse “years of decline” in saving, according to the National Association of Pension Funds (NAPF).
NAPF has published research to coincide with the introduction of auto-enrolment, which it says underlines the importance of the new regime.
The research, which surveyed nearly 1,000 employed respondents, found that:
- Nine respondents in 10 (89%) believe that every worker should be entitled to a workplace pension.
- Less than half (46%) are members of a pension scheme at work, and one-third (32%) work for an employer that does not offer a pension.
- Only a quarter (24%) of those earning £14,000 or less are currently saving into a pension scheme at their workplace.
- Two-thirds (65%) said that they are likely to stay in their new pension.
Of those who said they are likely to stay in their new pension:
- 87% think that auto-enrolment makes it easier for people to save;
- 73% say that a pension is a good option because interest rates on ISAs and savings are so low; and
- 87% say that the state pension alone will not be enough for them in retirement.
Joanne Segars, NAPF chief executive, said: “This is a game-changer that will get millions of people saving for their retirement. The UK is drifting towards an iceberg when it comes to paying for its old age, and we need radical reform like this.
“Things have got to change. Less than half the workforce is saving into a pension and, without auto-enrolment, millions would end up scraping by on the state pension alone. Putting everyone into a workplace pension will help reverse years of decline in retirement saving.
“Crucially, this reform will reach those who have no pension – the young, the low-paid, and those working for small businesses.”
The Confederation of British Industry’s director-general, John Cridland, said: “The UK needs a renewed focus on long-termism if we are to secure sustainable private-sector growth and rebalance the economy. That means taking bold, visionary action now to address the problems we expect to face in the future – and few challenges are more pressing than rebuilding a culture of saving. Boosting pension saving is essential to caring for our ageing population and increasing investment in our economy.
“Auto-enrolment is the right way to meet the challenge. 1 October marks a new dawn for pension saving, with many millions of employees being given the opportunity to save towards a pension and benefit from an additional contribution from their employer.
“The business community is committed to helping employees to achieve a good income in retirement. Auto-enrolment will encourage them to think long-term about their finances to achieve this goal.”