Last week the Department for Work and Pensions launched a new workplace pensions advertising campaign to encourage people to ‘get to know’ their pension.
Commenting on the launch, Adrian Boulding Director of Policy at NOW: Pensions said: “Educating savers about the benefits of saving into a workplace pension is a must.
“But, as auto enrolment minimum contributions increase, savers need to know that as well as their employer putting more in, they’ll be a jump in the amount coming out of their own pay packet. The vast majority of savers are completely in the dark about these rises and the DWP campaign does nothing to enlighten them.”
Research* conducted by NOW: Pensions revealed over two thirds (62%) of auto enrolled savers are unaware that minimum contributions are increasing from 2% to 5% of qualifying earnings in April 2018 and to 8% in April 2019.
While over two thirds (68%) decided not to opt out of their workplace pension, nearly three quarters (74%) were unaware that if they opted out of their workplace pension or ceased active membership, that they would be automatically re-enrolled every three years.
Adrian continues: “Communicating the increase without scaring the horses isn’t easy – but this major knowledge chasm needs to be addressed hand in hand with reinforcing the benefits of workplace pension saving.”
These findings echo research** NOW: Pensions conducted last year which revealed nearly two thirds (63%) of auto enrolled savers are unaware that minimum contributions only apply to “qualifying earnings”.
Notes to editors
The following table illustrates the differences in the amounts of monthly income workplace pension savers will be putting into their workplace pension per month. The calculations are based on annual earnings, auto enrolment minimum contributions and qualifying earnings:
*Research conducted by Opinium from 8 – 12 September 2017 with 2,007 UK employees aged 22 to 66.
** Research conducted by Opinium from 12 – 15 July 2016 with 2,004 nationally representative UK workers (aged 18+). Of these, 1127 have been auto enrolled.
“Qualifying Earnings” are defined by Pensions Act 2008 as the part of annual earnings that lie between £5,876 and £45,000. The statutory minimum pension contribution of 2% only applies to earnings in this band. The upper and lower limits are reviewed by Government each year.