More than one in four employers say employees have left their workplace pension scheme as a result of the Covid pandemic.
There are concerns that this could unroll some of the gains made by AE in recent years. These figures were reported in the Association of Consulting Actuaries’ 2020 Pension trends survey.
However despite this drop in numbers there is still widespread support for auto-enrolment from employers, with larger firms in particular supporting an increase in AE contributions levels.
The survey found that six out of 10 (62 per cent) employers think more flexibility would lead to higher saving, this figure is up from 53 per cent from the survey last year.
In addition the survey found most larger employers support minimum contributions increasing to 10 per cent from April 2022.
Pension coverage remains a major problem, with the vast majority (nine out of 10) employers in favour of extending AE to over 18s and applying AE from the first £1 of earnings.
The survey found 59 per cent of employers now engage ‘gig workers’ who, in addition to 15 per cent of their employees, are ineligible for AE. Pension coverage hasn’t been helped by the unsurprising increase in cessations following Covid-19.
ACA chair Patrick Bloomfield says: “The government has resisted calls to include AE reforms in the Pension Schemes Bill. The ACA’s survey shows strong support from employers, to add to support for reforms from MPs and Lords. We call on the government to publish a timetable for its next AE review and implementing the recommendations of the last AE review.
“It’s understandable that more people have opted out of pensions following Covid. Our challenge is that we weren’t saving enough for a decent retirement in the first place. This will leave more people facing a miserable retirement.
“Our society needs the government to bring in higher minimum savings rates, which apply to more people. It will take time to phase in, so we need to start planning now, as part of the government’s ‘build back better”’response to Covid. Continuing to duck the issue of adequate pensions will come home to roost when people can’t afford to retire.”
ACA DC committee chair Tessa Page adds: “This year’s survey underscored many of the weaknesses that remain in the DC-world.
“Employers need to do more to encourage employees to stick with pension saving, make the most of their workplace schemes, and, ideally, offer more in the shape of guidance so the value of long-term savings is appreciated better – this will support employers too in managing the challenges of an ageing workforce.
“For those who have opted out of saving during the pandemic, employers can help to get them back on track through targeted communications and re-enrolment.
“And employees must relocate the savings habit over the ‘spend now’ habit and look to plan ahead.
“The self-employed and those working for any length of time in the ‘gig economy’ – with no workplace pension are a particular concern, and it would be great to see government policy to better support these groups. Aside from a windfall, there really are no short cuts to ensuring greater peace of mind for life after work.”
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