More than half of employees have no intention to stay in pension schemes after they have been automatically enrolled into them according to new research from Aviva.
Asked how they will respond to automatic enrolment, just 43 per cent of those employees without a pension currently said they will remain within the scheme once enrolled, with 21 per cent undecided and 37 per cent believing they will opt out.
Of the 43 per cent intending to stay in, 27 per cent said they will be very pleased to have a pension, 8 per cent said they will contribute more than the minimum levels, and 8 per cent. said they will stay in because they could not be bothered to opt out
The 37 per cent who say they will opt out break down into 18 per cent who say they cannot afford it, 16 per cent who will opt out as ’they prefer to make their own arrangements’, and 3 per cent who will opt out when they get around to it.
Employers’ estimations of opt-out rates vary widely, with 23 per cent thinking that none of their staff will opt out and 27 per cent unsure of how many of their staff will opt out. Of those who feel that some of their staff will opt out, the typical percentage of workers they believe will actively decide to leave the scheme is 33 per cent.
Overall, just 23 per cent of companies said they feel fully prepared and understand what they will put in place, 11 per cent said their planning is well advanced and 28 per cent have started planning. But 11 per cent of those who have heard of the legislation have no plans at all, and 27 per cent say that they have not started discussing the legislative implications for their business.
While 43 per cent of employees wanted to be kept abreast of developments within workplace savings, 41 per cent were apathetic, the research found. Almost a fifth (18 per cent) would be interested in pension information on a regular basis in their payslip and 17 per cent would like accessible information on the intranet. But 8 per cent of employees said they don’t want to know about workplace savings, 6 per cent want information less than once a year, and 19 per cent said once a year was enough.
For those companies who have started planning for automatic enrolment and currently offer a pension, 67 per cent have indicated that they intend to maintain their current scheme.
The remainder will adopt a two-tier system by maintaining their current pension provision and adding a compliant second scheme for those employees who are not yet scheme members.
The research found 42 per cent of employers say they don’t think this change will have an impact on their business and 31 per cent say it will have a positive impact on their business.
Iain Oliver, head of workplace savings development says: “Given the high number of ’don’t knows’, providers have got to get engagement strategies in place to make them stay put. They have got to be as persuasive as possible.
“The data shows quite a high number of employers see auto-enrolment positively and are using it as a catalyst for changing their entire benefit structure. But quite a few employers think they need to give other benefits as well, so it is not all doom and gloom.
“Data mining, getting the right data out of systems, will be essential for employers to make the right decisions about which certification route they want to go down.
“There are three alternative ways of measuring compliance and figuring out which part of the workforce needs which one will be a big job. If part of the workforce is administration and the other part sales, for example, the employer may want to certify them in different ways if it wants to control contribution costs. Employers need to crack on with getting the data out of their organisation and scouring the market to find which of the wide variety of tools, whether from EBCs, providers or flex operators are going to be the best for them. This needs to be done well before the staging date.”