Context

The National Employment Savings Trust (NEST), which represents pension providers, publishes annual insight reviews. This 2014 study looks at the behaviours and attitudes of members newly enrolled into workplace pensions and the experiences of employers who have set up schemes to comply with the new duties. It also looks ahead to consider the unpensioned workers who will be enrolled in the coming years and the employers yet to embark on the scheme.

The study

Over two million people benefitted from a new workplace pension between the 2013 and 2014 editions of this insight report. This report looks at what was learnt from the first full year of automatic enrolment, while also considering potential issues and problems in the future. Despite being the 2014 study, all findings reported refer to the year 2013.

The study drew on the following resources:

• The employer readiness survey: regular surveys by NEST of employers to track their readiness, awareness and understanding of automatic enrolment. Each survey is of around 600 respondents.
• Intermediary survey: Regular survey of intermediaries to track their preparations for the pension reform and how they are supporting clients. Each survey involves approximately 150 employee benefit consultants and independent financial advisers.
• Consumer survey: a regular survey of 1,000 consumers who were either eligible for automatic enrolment or had recently been automatically enrolled.
• Employer decision-making quantitative survey (2009): An in-depth exploration of 3,079 employers’ attitudes and knowledge about pensions.

Key findings

• :
• 86% of people were aware of automatic enrolment
  • Over two-thirds (68%) of people agreed that auto-enrolment was a good idea
  • Only 10% of people opted out in 2013, compared to the predicted drop-out rate of 15%
  • The main motivations for remaining in the pension scheme were:
• Not wanting to lose employer contributions (50%)
  • Feeling that it’s time to start saving for retirement (43%)
  • It was the easy thing to do (37%)
• :
• The research suggested that pension saving was becoming more of a priority for consumers, rising from 7th place in 2011 to 3rd place in 2013. This was behind holidays/travel and ‘saving for a rainy day’.
  • Half (50%) of the people involved in the research agreed that saving into a workplace pension increases the amount of money you have when you retire; while 11% disagreed or did not know (39% were neutral).
• • While the appetite for pensions seemed to be increasing, there was still a lot of uncertainty about how the pensions would work in practice. People who thought they were doing enough to fund their retirement were in the minority, and this proportion was falling.
  • In 2013, consumers were even less confident than in 2011 that their current and future savings would be enough to support them in retirement (9 % compared to 14% in 2011).
• • Around half (48%) of people had an idea of how much money they would need for retirement.
  • Thinking of the kind of savings target that would help them plan for retirement, almost three-quarters (73%) of people said a fixed level of income would be the most useful target; while half (50%) said it would be a certain percentage of their current income. Over a third (35%) saw their desired lifestyle as the optimal target to aim for, while a third (33%) saw a fixed-lump sum as the best pensions and savings goal.
• :
• Almost two-thirds (63%) of employers found automatic enrolment more difficult than they had expected, while 55% found it hard to understand the legalities of the reforms.
  • Three-quarters (74%) of employers said that they would seek or had already sought advice, with half of them saying they are willing to pay for it.

Note: The report includes many further findings relating to employer and intermediary perspectives.

Points to consider

• The report gives little indication of the methodologies or confidence levels related to individual findings; readers may need to identify and review those sources.
• : The report identified clear trends and priorities in consumer attitudes to auto-enrolment in 2014, which would have been of vital use to policymakers and employers.
• : The results of this research can be seen as a reasonably robust snapshot of attitudes to automatic enrolment in the UK, though it is now four years old and the pensions landscape has obviously changed considerably in the intervening years.

Full report

NEST Insight 2014: Automatic enrolment - full report