Auto-enrolment is having the unexpected side effect of making people blasé about their pensions and increasingly neglectful of their need to make pension-related decisions.
Research undertaken by Aviva discovered that 15% of private sector employees are unaware of their pension choices or have never reviewed them, compared with just 9% three years ago when auto-enrolment was launched. Almost one in five employees at small businesses are neglecting their pension savings with more SMEs set for auto-enrolment this year. The research found that being unable to afford the contributions was the leading cause of employees opting out. 24% of employees believe it is too late to start saving and 13% of those are aged between 25 and 34.
The lack of awareness of fund choices rises to 19% among employees of small busineses. This figure could rise further over the year amongst small business employees, with 480,000 small and medium-sized enterprises beginning auto-enrolment in 2016. Furthermore, the findings highlight that even fewer employees are seeking financial advice before reviewing any investment choices, with only 4% admitting they do so, compared to 7% three years ago.
The importance of participating in auto-enrolment cannot be stressed enough, and it doesn’t end once employees start contributing.