Nobody has any idea about new pension thing happening
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More than half of workers are "totally unaware" that they will be auto-enrolled into a pension plan when changes to the law come into force next year, according to a survey.
The Chartered Institute of Personnel and Development's (CIPD) quarterly 'Employee Outlook' (12-page/370KB PDF) revealed that young people and those in non-management roles were least aware of the changes, with fewer than a third of workers aged between 18 and 24 indicating awareness.
Knowledge of the introduction of the scheme increases with age and seniority, with 45 per cent of 45 to 54-year-olds and 57 per cent of workers aged 55 and above aware of the changes.
Simon Tyler, a pensions expert with Pinsent Masons, described the response as "no great surprise", citing recent research commissioned by the Pensions Regulator into employer awareness of the changes.
"There are still many employers, particularly smaller employers, who are not yet aware what auto-enrolment will mean for them. It comes as no great surprise that workers don't yet realise what's in store," he said.
Between October 2012 and September 2016 employers will have to start auto-enrolling their workers into a pension scheme which meets minimum requirements. Employers will be required to automatically enrol "eligible jobholders" aged between 22 and the State Pension age who are earning more than £7,475 a year.
Workers can choose to opt out of the pension scheme, and other members of the employer's workforce will be able to choose to "opt in" even if they are not eligible for automatic enrolment. The employer will have to arrange membership of the scheme for those workers if they choose to do so.
The CIPD described the changes as "the biggest reform to pensions for a century".
Recent research commissioned by the Pensions Regulator (48-page/2.3MB PDF) revealed similar gaps in awareness from employers. As few as two in five employers are aware of the reforms, the research claims, while only 1 per cent know that the age from which auto-enrolment applies is 22.
Three-quarters of employers also mentioned some form of challenge to compliance with the new scheme, with the most common concerns being the cost implications and administration issues.
"These findings suggest that both the government and employers need to take a nuanced approach to communicating pension reforms to employees. With less than a-year-and-a-half to go, employee awareness is generally quite low," said Charles Cotton, CIPD adviser for performance and reward.
"From our survey, we can see the greatest challenge to communicating the reforms is among the young. A more targeted effort in communicating the changes to this group is needed to ensure they understand how the reforms will directly benefit them. The danger is that a cheap and cheerful one-size-fits-all communication approach could end up costing the government more in the long term through a lower understanding and appreciation of retirement savings."
The CIPD survey also found that nearly three-fifths of workers were worried about paying for their retirement, with 65 per cent of women anxious about funding their retirement compared with 53 per cent of men.
Copyright © 2011, OUT-LAW.com
OUT-LAW.COM is part of international law firm Pinsent Masons.
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COMMENTS
I started saving young.
I saved with a respectable pension provider too - Standard Life.
My savings are worth *exactly the same* as if I had put all the money in a biscuit tin under my bed. If not, slightly less.
The only difference being I am not allowed to access the savings in my pension fund until I retire.
I wish I had never ever bothered with a personal pension, and kept the Cadbury Roses tin from Christmas 1988.
Personal pensions are a scam. Kids: pay off your mortgage first.
Think of the country
It's a tax scam by the government.
They have a tax on pension funds and they want to rake in more money.
Re: Please explain the scam!
"If you choose an investment which goes nowhere it is not the fault of the wrapper."
What the hell are you talking about?! The whole point of choosing a pension provider or fund manager or whatever is that they do all the legwork and bloody well make sure that the investments actually appreciate in value, not that the punter has to work the stock and bond markets themselves, placing orders every day while they are actually supposed to be working. You know, in that real job that pays the money the punter has to invest in the first place.
"There is no pensions scam, just bad decisions on your part."
Bollocks! I'm tired of all this "ooh, shop around" where you spend all of your fucking time doing that because a bunch of people are unable to do the job they have been asked to do. If they can't make a better return than the market, for example, they should stop pretending to be in the investment business. It should not be the job of the punter to nanny the different fund managers and/or jump from horse to horse like in some fucking western movie.
People wouldn't be so pissed off at the finance industry if those working in it actually owned up to their failings, but given that they appear to take a management fee regardless of how shit their performance is, no-one should be surprised that the pitchforks are out when these people reward themselves handsomely year in, year out as the punter's investments can't even match inflation.
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