Auto-enrolment meeting targets - but employers and employees still have much to consider
The Pensions Regulator (TPR) has published new figures showing that more than eight million employees have signed up for a workplace pension since the launch of automatic enrolment in October 2012.
With auto-enrolment originally aiming to get this number of workers saving more for retirement, the figures have been hailed as showing the success story of the initiative – especially as hundreds of thousands more employers are yet to enrol staff.
Guy Opperman, minister for pensions and financial inclusion, said, “Reaching this eight million figure is a formidable achievement and represents a huge number of people on the path to a more financially secure retirement.”
However, the TPR’s director of automatic enrolment Darren Ryder has pointed out that employers must ensure that they are remaining compliant – both through auto-enrolment and re-enrolment, and also as contribution rates increase.
Opperman continues, “We cannot be complacent and as contribution rates rise we know there is more to be done. That’s why our automatic enrolment review, which will report back later this year, is so vital to the future of this life-changing policy.”
And the onus isn’t simply on employers to ensure scheme compliance: with more employees than ever enrolled into workplace pension schemes, it is vital that they have the correct financial education to make the right decisions with their money.
Recent research has shown that three quarters (73%) of UK employees will work past the age of 65 (Canada Life Group Insurance), with only one in ten (10%) UK employers believing their employees are saving enough for their retirement (WEALTH at work).
Jonathan Watts-Lay, director, WEALTH at work, a leading provider of financial education, guidance and advice in the workplace comments: Whilst auto-enrolment is a positive step, there is still a long way to go until we are at a stage where the majority of employees are producing adequate savings for financial security at-retirement.
Retirement might seem a long way off for many but individuals really need to think about how they are going to fund their future income as early as possible, to get a better understanding of what they need to be doing now.
Saving more now or working longer than planned could make a real difference and the value of well thought out planning from early on should not be underestimated.
Financial education and guidance delivered in the workplace is crucial to help individuals set and achieve their financial goals, giving them more control over their finances, and ultimately their retirement plans in the future.
Then, once at-retirement, financial advice should be made available to employees to support better decision making and protect them from costly mistakes, such as paying unnecessary tax or being scammed.”
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