ALMOST A QUARTER of ineligible employees would like to be auto-enrolled (AE) into a workplace pension, according to the Chartered Institute of Personnel and Development (CIPD), reports sister publication Professional Pensions.
The survey of 2,500 employees also found 52% of people who were eligible for AE would remain in the scheme, while 48% would choose to opt out.
CIPD performance and reward adviser Charles Cotton said: “There were some people who thought it wasn’t necessarily for them. They thought it was a good idea to be in a pension scheme but either couldn’t afford to contribute or had other ways of saving.”
The study showed the average employee contribution to a defined contribution (DC) scheme was 5%, compared to 6% for defined benefit (DB) schemes.
Average employer contributions to DC schemes were 5% and 8% to DB schemes, bringing the combined contribution rate to DC pensions 2% above the target AE minimum requirement of 8%.
Cotton said: “Obviously those people who were surveyed would have been in larger organisations that have a tradition and a history of workplace pension schemes so you’d probably expect those types of figures.
“It will be interesting when we start to have smaller and medium sized organisations auto-enrolling. Will the average contribution rates go down?
“Our concern would be that many employees would find it difficult, considering what has happened to real wages. They’re not going to be able to increase their contributions until real wages start to go up. And employers won’t be able to increase real wages until productivity starts to improve.”
Results of the research also showed the average employee expected to retire at 66, compared to 67 for those not in a pension scheme.
A previous study from Aegon found 24% of people aged between 20 and 29 planned to retire by the time they were 60 (PP Online, 12 November 2013).
The CIPD survey showed 11% of non-pension savers predicted they would work until they were over the age of 75, with Cotton saying a lot of people would adjust their retirement expectations to increases in the state pension age.
“What may be of greater concern to employers is what will happen to those individuals who aren’t in a pension scheme,” he said.
Other findings revealed 55% of DC savers knew where their money was being invested. Some 40% also understood how high their management fees were, with better awareness among higher earners.