5 Takeaways From Scottish Widows’ Workplace Pensions Report 2014
Scottish Widows has released its report on the workplace pensions landscape and we’ve had a look through and present in this blog post what we think are the 5 most important points to take away from the 2014 report.
1. Less than 2% of businesses have staged for auto enrolment
The report starts with a bang as CBI Director Neil Carberry points out in his foreword that only 2% of businesses have to-date already gone through auto enrolment staging.
On top of that, these 2% of businesses are the largest in the country and, thus, much more likely to have HR departments and people with expertise in pensions. The SMEs which make up the rest of the businesses in the UK and which have largely yet to stage are much less likely to have expertise in pensions provision and the auto enrolment process could be in for a bit more turbulence than has been seen until now.
2. There is no change in people’s attitude to auto enrolment
The number of people who reported having a positive view of auto enrolment remained at the 2013 figure of 65%. Even back in 2012, the figure was 61% so it is clear that people’s attitudes aren’t changing.
The number of people aware of auto enrolment has significantly increased, however. The percentage aware of it has almost doubled since 2012 when 39% of people knew what it was. Now 77% are aware of it.
3. Lack of money is the main reason for opting out
Not surprisingly, lack of money was the main reason given by those who opted out of a workplace pensions scheme, with 29% of all opt outs giving that reason while 32% in the £10k to £30k income bracket said it was because of lack of funds.
This will be reassuring to those behind the scheme and the fact that more people have opted out for lack of money rather than for lack of interest (as 23% of all opt outers did) must surely be seen as a positive and future wage increases may indeed encourage this group to contribute further down the line, assuming the increases in contributions don’t outweigh any pay increases.
4. 30% of people would be willing to pay for financial advice
Just under a third of workers would be willing to pay for advice on their pensions.
This is an important figure and shows that there is a big demand for regulated financial advice, coming after the government announced that free guidance (different from advice) would be given to all. It would seem that a large proportion of the workforce wouldn’t be satisfied with solely the free guidance and would turn to a financial adviser instead or as well as the guidance offered by the The Pensions Advisory Service and Money Advice Service.
The report itself casts its doubt as to the effectiveness of only taking the free guidance, saying: “The 2014 Budget pledge to provide free and impartial guidance at the point of retirement will help, but planning for retirement is a 30-40 year journey, not a 45 minute conversation.”
For information on the retirement advice that DAM offers, you can visit our dedicated page here.
5. Pensions are valued by employees
Perhaps the most important figure for employers in this research is that 30% of employees say that their workplace pension is an incentive for them to remain with their current company.
This number is up from the 25% that said their pension encouraged them to stay in their current job in the 2013 report and this is likely because of the influence auto enrolment is having in the workplace by enabling workers who have never before been in a pension scheme to participate.
Photo credit goes to Gerard Van der Leun