Families oblivious to pension benefits
According to a new report from insurance giant Aviva, families living in the UK are not incentivised by the pension schemes on offer. The company has released the results of its second family finances report, and they show that under a third – 28% to be precise – of family providers where making regular contributions to a workplace pension.
This is a worrying revelation, considering almost three quarters of respondents would be enthusiastic about adding more to their pot – providing their employers were willing to do the same, and match the amount they were contributing. However, a massive 43% admitted they were not part of a pension scheme because their employers were not providing one for them, whilst a further 20% specified that they had made the decision not to join the plan of their own volition – one in four described the pension schemes on offer as ‘unaffordable’.
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Head of pensions at Aviva, Paul Goodwin, blamed the low take-up on a knowledge gap; ‘A lack of understanding around pensions is also seriously hampering take-up rates,’ he says, adding that it would be in the interests of families in the UK to take advantage of workplace pension opportunities. Mr Goodwin pointed out that families could have savings available to them, which could mean they are choosing to spend them on something else, rather than securing their futures.
In addition, only 15% of those asked said they would opt out of pension schemes, if auto-enrolment was brought in. Mr Goodwin feels that it would be an important step forward, and that everyone should work together; ‘all parties concerned – the government, product providers, employer and employees themselves – need to work hard to ensure that auto-enrolment is a success.’’
Aviva are pleased with the ‘positive sentiment’ surrounding auto-enrolment, but admitted that 12% of breadwinners were concerned the scheme would not be beneficial to them, and 16% shared worries that there would be a negative impact on the take-home pay. Research by the company suggests that this too is often as a result of lack of information, and there are many who could, in fact, afford to join a scheme, but are not aware because of perceived un-affordability.
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