Aviva is launching an in-depth ‘pre-review’ of auto-enrolment in advance of the Government’s own review in 2017 that will consider the impact of AE since launch and the prospects for retirement saving as minimum contributions increase.
The pre-review will include a series of events with policy and industry experts, policymakers, employers, and advisers.
The study will cover issues including whether AE should be expanded to cover new groups of people such as the self-employed, how employers have been impacted by AE to date and whether total minimum contributions should be increased beyond 8 per cent.
Aviva’s research has found that two thirds – 64 per cent of large companies found AE to be straightforward with that figure falling to 24 per cent of small companies.
Aviva points to the lack of engagment of new savers with their pensions – with 1.5m people unaware of or ignoring their fund choices in 2015/16, compared to just 380,000 in 2013/14.
Aviva managing director, corporate and business solutions Andy Curran says: “Most people would agree that auto-enrolment has been a great success in getting more people to start saving for their retirement, and our own research shows that around two thirds of employers and employees agree with AE. But we can’t be complacent if we are going to succeed in getting people to save smarter for their retirement. We have to recognise that the amount people are saving is still very low and engagement with pension saving is non-existent for some.
“There is a real risk that auto-enrolment has made some people believe the job is done when it comes to preparing for retirement, but in reality it is just the start. By carrying out this in-depth Pre-Review I hope we can take lessons from the story so far to make the future of retirement saving in this country a real success.”
“The number of people saving has increased considerably, which is clearly positive, but many of these people don’t know where their money is invested and don’t ever review their pension. Our study will look at the issues around engagement and what can be done to boost it in the future.
“We will also look at the challenge for employers, especially SMEs who have also had to cope with a rise in the minimum wage, the introduction of the ‘living wage’ and ongoing economic and political uncertainty in the build up to the EU referendum.
“The last three and half years of auto-enrolment have been hugely positive in boosting retirement saving but they are just the start of the journey. If people want to genuinely thrive, not just survive, in retirement, then there is much more work to be done. I hope our study will help us to build on that work, provide plenty of food for thought for the Government ahead of their own review in 2017 and help create a brighter future for pension savers.”
|Number of private sector employees with direct contribution (DC) pensions (source: ONS 2012, published Q1 2013, and 2015, published Q1 2016)||4,250,000||9,787,000|
|% of private sector employees paying into a DC pension who don’t know fund their fund choices or never review them (source: Aviva Working Lives Q1 2013 and Q1 2016)||9%||15%|
|Number of people unaware of or ignoring their fund choices||382,500||1,468,050|