Private sector employees ‘are not taking out pensions’
The majority of private sector office workers do not have a pension.
Research carried out by Nest, the state-provided default pension system, has found that seven-in-ten individuals operating in this sector have no post-work provisions in place.
However, annual pension contributions are expected to increase to £11 billion by 2018 thanks to the introduction of automatic enrolment, which means that people have to elect to leave the scheme rather than enter it.
This could be good news for people working in shared offices in London, as it may spur them on the take retirement saving seriously.
Nest chief executive Tim Jones stated: “Automatic enrolment sweeps away one of the biggest barriers to saving by harnessing inertia. However, there still remain a number of obstacles, ranging from the financial and the administrative to the emotional.
“In order to overcome these, all of us in the provider community need to continually develop our understanding of employers’ and workers’ perspectives and ensure we’re thinking carefully about delivering change to maximum effect.”
Perhaps unsurprisingly, it is lower-paid employees who are failing to put an action plan in place. Tom McPhail, head of pensions research for Hargreaves Lansdown, said there is still a lot of work to do, as only 63 per cent of UK adults are supportive of automatic enrolment.
Indeed, he added that even once people are brought into a scheme, they should still be looking to augment their pension savings wherever possible. But 67 per cent of respondents said they would no longer feel apprehensive once they are a member of a Nest scheme.
In terms of the challenges it brings to employers, administration, pension scheme choice and how to communicate the changes to staff were picked out as the top three and less than 50 per cent of companies with fewer than 5,000 workers have confirmed what provider they are going to use.