Automatic enrolment savings warning
A Scottish Widows Workplace Pensions report has revealed that the contribution rates by employees towards their pensions could be set to fall despite an encouraging auto enrolment opt-out rate of only 8%.
The report highlighted that more education was needed, in order for employees to start saving realistic amounts, as the average contribution fell from £76 per month in the previous year to £51 per month in 2013. The ‘reality of saving and auto enrolment kicking in’ was the reason cited for this drop.
The planned reform of the ‘pot follows member’ regime was also backed by the report. Individuals who do switch employment were likely to need advice; however, this initiative will ensure that those with small savings do not end up with fragmented provision.
Have you started planning for auto enrolment yet? Early feedback tells us that the process is very complex, which confirms why experts are recommending businesses leave at least 18 months to prepare for it. If you want to know what you need to do and when, why not download our free introductory guide?