Will pension auto-enrolment work? 1 in 3 set to opt out
Around three million people are likely to opt out of being auto-enrolled into a pension.
The latest figures, from the National Association of Pension Funds (NAPF), show that one in three people are likely to opt out of being auto-enrolled into a workplace pension.
The Pension Reforms, which are coming into place in October next year, and will be rolled out over a four year period, will mean that all employers must auto-enrol eligible workers into an eligible pension scheme.
The rules also mean that the employer must contribute a minimum of three per cent, and the employee must contribute whatever else is needed to make a total contribution of eight per cent of their salary.
Nearly half of those who said they will opt out said that they cannot afford the contributions, while 29 per cent said they do not trust the Government, and a further 26 per cent do not trust the pension industry.
Joanne Segars, NAPF Chief Executive, said: “People are wary of pensions and that’s a big threat to auto-enrolment. We’re alarmed that so many say they’ll reject the new deal, and the picture has got worse since the recession.
“Our society is sleepwalking into a crisis because it isn’t saving enough for its old age, and auto-enrolment is meant to be a big wake-up call.
“But there’s no point in bringing people into a pension if their savings are going to be eaten away by fees and charges which they can’t understand. They’ll simply walk away.
“With auto-enrolment just around the corner, the industry needs to do more to help people engage with their pension. The Summit will help forge a clear direction on transparency and communication.”