Context

National Employment Savings Trust (NEST), which represents pension providers, publishes annual insight reviews. This 2015 study sought to explore attitudes to auto-enrolment among UK employees, employers and the intermediaries who work with them. As well as the continuing roll-out of auto-enrolment in workplace pensions, the statutory introduction of choice for consumers about what to do with their pension pot had changed the wider context. NEST was interested to assess the developing effect of those changes.

The study

The study brings together a range of qualitative and quantitative sources, including work by NEST and other UK agencies, to extract figures and trends to illustrate the views of various stakeholder groups. This includes a regular survey of 2,000 consumers who were eligible for auto-enrolment. The present summary focuses largely on findings relevant to consumers.

Key findings

• • Retirement saving was one of the priorities for consumers when they were asked what they would do with extra money.
  • Only 9% of consumers saw their own or other house as their main potential source of retirement income.
  • 15% believed that their savings would be enough to support them from retirement after a dip to 9% in 2013.
  • More positive attitudes might have resulted from higher financial well-being among consumers overall.
  • 32% of consumers felt that they understood pensions, while 20% didn’t. Only 15% agreed that pensions were the best way to save for retirement, with 59% unsure.
• • Auto-enrolment continued to increase in popularity, up from 63% in 2011 and 68% in 2013 to 77% in 2014. Even 61% of those who had opted out approved of the policy, up from 45% in 2013.
  • The main reasons for staying enrolled were to benefit from employer contributions, being ready to start saving for retirement, and because it was the easiest option.
  • Overall, opt-out levels remained at 10%. The report notes that this level of success might not be sustained as more smaller employers moved into auto-enrolment.
  • About 1 in 4 workers over 60 opt out, compared with only 5% of those under 30. 31% of those over 51 who opted out did so because they felt it would make little difference to their savings, but 59% of that age cohort who had not opted out emphasised the importance of employer contributions..
  • More generally, lower-paid workers who opted out were more likely to cite affordability as the reason, although this had declined from 67% to 49% over the previous year. There were also falls in the proportion who lacked trust in providers, from 27% to 16%.
• • Overall, 48% of consumers were aware of the changes, with levels rising with age and income.
  • The new pension freedoms may have stimulated increased attention to pensions. 34% intended to think about retirement planning earlier, a figure that rose to 40% among younger people. 29% of consumers were more likely to increase their contributions.
  • 26% reported that the freedoms made them more likely to join a workplace pension, while 7% felt that they would make them less likely.
  • The new freedoms might drive more engagement with pensions in time.

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.
• The report is explicitly bound in time; contexts and attitudes may have changed since it was compiled; as has the pensions landscape.

Full report

NEST insight 2015 - full report