Latest IFS figures show increased pensions engagement and savings
As this year's latest blog series with WEALTH at work draws to a close, we have focused on the choices ahead of employees as they approach retirement, the fact that many are not saving enough currently, and the need for better workplace education around financial wellbeing.
It’s not all bad news, however. Figures released last week by the Institute of Fiscal Studies (IFS) show that the pensions auto-enrolment initiative, now in its fourth year, is paying off in both increased pension membership and overall pension saving.
Boosting pension membership to 88% of private sector employees between 2011 and 2015, the IFS found that this has served to increase pension saving by £2.5bn.
Positively, those workplace cohorts with previously little to no pension interactions have all shown increased engagement since being auto-enrolled, including:
- Those aged 22 to 29
- Those earning between £10,000 and £17,000 a year
- Those who have been with their current employer for less than a year
Nonetheless, the IFS also stated that for the majority of those coming into workplace pensions due to auto-enrolment, contributions are still at low levels: highlighting the need for strong workplace education around savings.
Jonathan Cribb, a senior research economist at the IFS, and an author of the report said, “Automatic enrolment has been very successful in boosting membership of workplace pensions. The story of automatic enrolment is certainly a case of so far so good. A key issue is whether those brought into workplace pensions at low contribution rates will remain in when minimum contribution rates start rising.”
Jonathan Watts-Lay, director, WEALTH at work, a leading provider of financial education in the workplace, supported by guidance and advice adds: “When saving into pensions there are two main issues that employees face; how much they should be contributing to get a good income in retirement and can they actually afford it? Financial education in the workplace is essential to provide employees with the understanding of how much income they will need in retirement to meet their expectations, and how they can manage their money more efficiently to enable them to save more into their pension.”
Reward and WEALTH at work are blogging about financial education, savings and retirement options. FOLLOW THE SERIES HERE
The blog will be finishing on Monday 5th December and recommencing in the New Year - watch this space!