Under the new requirements, eligible employees who do not opt-out will be expected to contribute a percentage out of their pay packet each month, which is added to a contribution from the employer. NAPF research found many workers wanted to save but did not know where to start. The AE reforms are designed to harness this inertia and kick start the savings habit. Our survey asked employees whether it was a relief to finally be saving for a pension – 69 per cent said yes.
Help is at hand
AE offers the greatest chance of getting people into the habit of saving for their retirement, and so far more than five million people automatically enrolled into a workplace pension scheme in the UK, which is fantastic news. Their employers have taken the opportunity to breathe new life into their pension arrangements and employees have been overwhelmingly supportive, with opt-out rates much lower than we expected. But for SMEs just embarking on the process, the hardest part is yet to come.
For SMEs automatic enrolment may seem daunting, but there are lots of sources of help and information. Full details on AE, including a planning tool, can be found on The Pensions Regulator’s website. The NAPF also has a suite of materials on its website, including a forum to share experiences with other employers or ask questions. And for employers looking to find out more information about choosing a good pension scheme there is help at hand on the PQM website.
Tomorrow we find out what big businesses’ advice would be to SMEs…