Strategic Society Centre and ISER research investigates the key drivers of pension saving among employees in Great Britain in a major study –
– Findings come from most comprehensive study into drivers of pension saving ever undertaken and include detailed analysis of savings choices made by 25,000 UK workers –
· Employer contributions reign supreme as the biggest employee pull to workplace pension saving, and are likely to prove the silver bullet for the Government’s pension reforms
· Half of UK workers currently save into occupational pension schemes, but take-up of workplace schemes is 80 per cent where employers make contributions
· Only two-in-five people working for firms with fewer than 25 staff have a workplace pension available to them
Employer contributions are by far the biggest pull for employees joining workplace pension schemes, new research has found. People are 70 per cent more likely to save into a scheme if their employer also makes a contribution.
The report, Who Saves for Retirement?, published today and sponsored by Prudential, provides in-depth analysis of the characteristics of pension savers in Britain, including the factors which influence people’s decisions to save into a pension.
At present, half of UK workers are saving into occupational pension schemes. This is likely to increase further in coming years, as up to nine million people are expected to either start to save into a pension, or save more, with the implementation of auto-enrolment. This is further supported by the research findings which show that where employers also make pension contributions, 80 per cent of employees save into an occupational pension today.
By not bowing to pressure to exclude small firms from auto-enrolment, the Government is ensuring that 30 per cent of all UK employees will have the opportunity to save into company pension schemes. Currently, only two in five employees in companies with fewer than 25 employees are making pension contributions.
Minister for pensions Steve Webb said: “These findings are good news. Our research shows that workers welcome a contribution from their employer.
“Automatic enrolment will transform our savings culture and give millions of people, including many low and middle-income workers, access to a pension with an employer contribution for the first time in their lives.”
Rob Devey, chief executive of Prudential UK & Europe, said: “This research shows that pension reforms are on the right track. The Government can be optimistic about the impact that auto-enrolment will have on retirement savings in the UK. Expanding pension eligibility and employer contributions are powerful measures which are likely to have a significant impact on the retirement savings landscape – especially for those working in small firms.”
