A recent YouGov poll, commissioned by Aon Hewitt, revealed that only one in five members of the British public have any idea auto-enrolment to company pension schemes is to be introduced widely in 2013. The lowest level of awareness (16%) was, worryingly, amongst campaign’s target demographic: those not already enrolled in a workplace pension scheme.
The YouGov research was followed by a later report by Scottish Widows which found 52% of its workers were also unaware of the changes to their pension plan. The figure amounts to 9.9 million people in the UK and seemingly bucks data suggesting an upwards trend in the average number of people wanting to save for retirement.
This will change quickly, for example in Australia they quickly got used to funding their own retirement.
With the introduction of auto-enrolment now underway, the research is worrying for the government, especially since 6% of respondents said they had not even seen the Department for Work and Pensions’ advertising campaign on the auto-enrolment initiative. Aon Hewitt points to a need to increase efforts to communicate with the public – especially now that the country’s biggest employers are implementing the new system.
Awareness of the implications of auto-enrolment is crucial to its success, say many observers – who worry that employees insufficiently informed about their automatic pension contributions may reject the changes completely. Although awareness might be low, experts point to the fact the amount employees are willing to pay into a retirement fund doubled in 2012, from £37.50 a month, to £76.95. Observers say the figures demonstrate the potential for auto-enrolment to be both well-received and radically improve the current state of UK retirement saving.
Noting the low-awareness level of auto-enrolment’s “primary target” demographic, benefits design specialist for Aon Hewitt, James Patten, stressed the importance of both employees and those providing trustee services to raise the initiative’s profile:
“Given the government has had limited success,” said Patten, “many employers will need to ensure they give due attention not just to the burdensome processing aspect of auto-enrolment, but to how auto-enrolment is perceived by the workforce.”
While the government did introduce TV adverts in September, there is still a significant role for employees in communicating the reasons to remain ‘opted-in’ to the process:
“There is clearly an education gap.” said Patten. “Employers need a strategy to deal with the regulatory communication requirements and to ensure their employees understand the implications of auto-enrolment before contributions are deducted.”
Patten acknowledges a general stigma of pensions administration – one with which anyone involved in trustee services will be familiar. Instead of offering “lengthy documents” to explain the new pensions set-up, Patten suggests “brief, warm-up communications as well as educational roadshows” should form part of a carefully considered communications strategy.
The good news for auto-enrolment proponents is that research seems to demonstrate employee’s receptiveness to this kind of communication strategy. Scottish Widow’s 2012 report revealed employees’ expectations of their company’s responsibilities – with 74% believing they should be given “full financial advice and information on retirement planning” by their employer. A further 53% believed that an employer pension scheme “was an incentive to stay with the company”.