Morten Nilsson, CEO of NOW: Pensions, comments on the importance of auto-enrolment and the results of The Association of Consulting Actuaries’ 2011 Pensions trends survey*:
“The key issue as we start the New Year is making auto enrolment a success in the UK. The ACA’s research suggests only a quarter of employers have budgeted for the move to auto-enrolment, and a fifth are actually looking to decrease their pension spend – both worrying facts indeed.
Opt-out rates are crucial to the success of the initiative, the two determinants of which are employers’ attitudes towards workplace pensions and employees themselves believing in the value of saving for retirement. Employers embracing auto-enrolment will see lower opt-out rates than those who are treating it as a necessary evil.
“Generally speaking it is clear employers have the best interests of their employees at heart, but obviously the current economic climate is not helpful. It is essential the Government avoids any further delays or changes to the implementation of auto-enrolment, which may lead to increased confusion and waning of confidence.
Nilsson concluded: “Many employees are sceptical about pension saving as they do not currently believe pension providers will safeguard their money, instead fearing their savings will disappear as a result of high charges and poor investment choices. It is therefore vital that this perception is changed; employers have a crucial role to play however the pension industry needs to take responsibility by offering products that are cost effective, transparent and include default investment options that are fit for purpose.”
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