The Government’s plans to auto-enrol employees in their employers pension schemes is intended to reduce the strain on their coffers in years to come. But the initiative has run into something of a stumbling block – half of us don’t even know it exists
Since it took power in 2008, pensions reforms have been one of the Coalition’s biggest tickets. Attempting to address the predicted pensions shortfall, the reforms – which notably included the scheduled raising of the State Pension Age – finally reached their peak with the switch to auto-enrolment for employer pension schemes. However there is some rather worrying news for those involved in the reforms. Despite the initiative’s imminent roll-out to the UK’s largest employers, over half of the UK’s workforce are entirely unaware of the impending change.
According to the Scottish Widows Workplace Pensions Report 2012, almost 10 million people have no idea that the nation is switching to auto-enrolment. But how is the message not making it to employees? You would think that given the impact the scheme will have on workplace payroll and pensions schemes that employers would be getting their staff up to speed well ahead of the staged rollout taking place over the next five years. Unfortunately, according to the report, only 16% of those who were aware of the scheme were informed by their employers – an astonishing 61% found out instead through the news and media. Even more worrying however is the fact that only a third of employees on an income under £20,000 – precisely the demographic the Government’s initiative is aimed at – had any knowledge of the coming changes to their pension scheme.
Despite this, the picture for auto-enrolment isn’t all grim. The Workplace Pensions Report found that support for the scheme amongst those who were aware of it was overwhelming – only 11% indicated that they would opt-out of schemes. A huge vote of confidence then for the initiative. Which given the controversy the majority of their reforms have generated, must be something of a relief for the Coalition.