New research from PensionBee reveals that only 18% of respondents regretted automatically paying into their pension during the pandemic, citing either poor performance of investments or financial difficulties.
However, the majority of respondents (75%) were happy to be auto-enrolled in a workplace pension during the pandemic, with 33% stating that it highlighted the importance of saving for the future. The leading online pension provider also found that 83% of respondents agreed that all workers should be automatically enrolled, regardless of annual earnings or age.
These findings suggest an increasingly positive consumer attitude towards the government’s Auto-Enrolment scheme which was established to help more people save for retirement, with the help of their employers. Since its introduction in 2012, there has been a significant increase in the proportion of workers saving into a pension, almost doubling the participation of 22-29 years olds in pension saving (1).
Research conducted by NEST also found that while there was a small rise in incidences of opting-out (reaching 12-13%) at the beginning of the first lockdown with a further spike in the summer, by September 2020 opt-out rates had stabilised (at 10%). In the first quarter of 2021, opt-out levels matched those in the second half of 2019 indicating no significant change in attitudes due to the pandemic (2).
While there was widespread support from both genders on extending the parameters of Auto-Enrolment, women were most passionate about the issue, with 46% of female respondents strongly agreeing compared to 37% of men. According to ONS data from April 2020, 22% of employees don’t have a workplace pension scheme. This is due to being under the age of 22 or for earning less than the £10,000 annual threshold (3). Of this group women were disproportionately penalised as they work in multiple or part-time jobs, or in unpaid work due to caring for children during childbearing years or elderly relatives later in their career.
A review of the Auto-Enrolment policy in 2017 recommended lowering the age threshold to 18 years and removing the lower limit on the qualifying earnings band, so that contributions are paid from the first pound earned (4). At the time, the government indicated it was its ambition to implement these changes in the mid-2020s.
PensionBee CEO, Romi Savova, comments: “The introduction of Auto-Enrolment has done a lot to compel people to save, while making the process as easy as possible for consumers. However, for too long, a significant proportion of the population have missed out on this sizable benefit. At PensionBee, we welcome any proposed reduction to the current age and contribution thresholds in Auto-Enrolment policy, to cover these underserved groups and ensure everyone has an equal assistance on their road to a happy retirement.”
Appendix
Table 1: Attitudes towards Auto-Enrolment due to the pandemic
Source: PensionBee, August 2021. Total survey respondents: 499. Numbers have been rounded.
Table 2: Attitudes to eligibility
Source: PensionBee, August 2021. Total survey respondents: 500. Numbers have been rounded.
Footnotes
