Pensions auto-enrolment could bring the number of UK workers saving for retirement up to over 80% of the UK, according to new CIPD figures.
Under the government’s auto-enrolment programme employees are automatically enrolled onto a pensions scheme in which both employers and employees make minimum pension contributions – but employees can choose to opt out of the plan.
However in CIPD’s survey, Labour Market Outlook: Focus on pension auto-enrolment it was found that that 62% of employees who were not currently contributing to a workplace pension would stay opted in when they were auto-enrolled. This will bring the estimated number of people saving for a pension from 52% of the country to 82% by 2018.
The CIPD warns that employers should begin to assess the possible impact of the change, however, and have found that only 25% of firms have started to evaluate possible effects, whilst 20% have no intention of doing so.
The cost to employers of a large increase in pension provision for their employees could be substantial, which may lead some employers to reduce salaries or other benefits.
NEST welcomed the high level of auto-enrolment awareness reported by employers, but pointed out that ’11 million people working for 1.2 million employers will benefit from automatic enrolment ‘. Given the size of this change, they warned employers that the scale of the challenge should ‘not be underestimated’.