David Gauke: ‘A private pension should not be a privilege’
Over 80% of workers who qualify for automatic enrolment (AE) believe a workplace pension is good for them, a Department for Work and Pensions (DWP) survey has revealed.
Meanwhile, another 79% said increasing both employee and employer contribution levels would also be good for them, with just 6% disagreeing.
The findings were almost unanimous across different demographics, including sex, social grade and age. Workers between ages 22 and 34, and 55 and 59 were the least supportive of increasing contributions, although only marginally so at 76% and 75% respectively.
Those between 60 and 64 were the most supportive, with 86% backing an increase in contributions.
The findings will be welcomed with less than eight months to go until total minimum AE contributions increase from 2% to 5%. From next April, employees will see their contributions triple from 1% to 3%, with the employer providing the remaining 2%.
In April 2019, they will again increase to 5% and 3% respectively.
The research, conducted by Ipsos Mori, involved face-to-face interviews of nearly 1,500 employees aged between 22 and state pension age who earn over the AE earnings trigger of £10,000.
Secretary of State for work and pensions David Gauke said the findings show saving for a pension is now a welcome norm.
“I want Britain to be the best country in the world in which to grow old and for people to feel prepared and confident about their retirement,” he said. “For this to happen, we must help young workers plan ahead, while managing the competing demands of day-to-day life.
“AE has been a huge success, helping millions more people save into a workplace pension. These figures underline the fact that saving for a pension has become the new normal, with people from all walks of life embracing it.
“A private pension should not be a privilege, it should be something that the vast majority can work towards to complement the state pension in later life.”
The survey also found most AE qualifiers said they felt they knew where to go if they needed to find out more about workplace pensions, with 83% agreeing with the statement, while just 7% disagreed.
However, this question did reveal a starker split between demographics. Although, on the whole, the majority of all groups did feel they knew where to go, 29% of non-white workers said they were not sure, compared to 15% of white workers.
Similarly, 23% of those classed in the C2DE social grade were unsure compared to 13% of ABC1 employees.
The findings will inform the DWP’s statutory review of the AE programme, which is due to report back to Parliament by the end of the year. The panel – which is headed by PTL non-executive chairman Ruston Smith, Standard Life head of pensions strategy Jamie Jenkins, and Pensions Policy Institute director Chris Curry – is seeking evidence and potential actions on engagement, coverage and contributions.