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15 Mar 2023
by Kate Smith

Auto-enrolment hasn't changed attitudes to saving, study shows

After a decade since the launch of compulsory pensions, more people are saving, but that doesn’t mean they are involved in the process

Auto-enrolment hasn't changed attitudes to saving, study shows.jpg 1


October marks the 10th anniversary of auto-enrolment into workplace pensions. The landmark legislation has seen more than 10 million employees auto-enrolled and benefiting from contributions to their retirement savings since 2012.

Has auto-enrolment been a success? In many ways, yes – £28bn more was saved into workplace pensions in 2020 compared with 2012. More women, young people and lower earners have kick-started their retirement savings.

Auto-enrolment helps employees to save for retirement without the need for them to actively engage with their pension. To explore whether this had changed attitudes to saving, Aegon conducted research with the University of Edinburgh Business School with a nationally representative group of 2,000 adults.

Auto-enrolment and employee attitudes

Research found that auto-enrolment has done little to change employee attitudes towards saving.

Benefits of auto enrolment:

  • 56% are taking a more active role in their planning and saving. This increases to 62% in 18-34 year-olds.
  • Younger people have an increased interest in saving for retirement in general, at 51% compared with 49% overall.
  • Fewer people are opting out of their workplace pension than expected. One in 10 employees have chosen to do so within 1 month of auto-enrolment, according to government figures.
  • 76% said they feel saving for the future is important.
  • 75% think paying into a pension is a positive thing.

These figures are promising. But only just over half of employees are taking more of an active role with their savings.

Drawbacks of auto-enrolment:

  • Inertia – 48% are now less likely to take action on saving, as they think it’s done for them.
  • Saving complacency – 52% feel confident they’ll have saved enough for retirement (rising to 62% in the 18-34 demographic), yet 56% have no idea how much they pay into their workplace pension.

While 39% said they were keener to save because of auto-enrolment, 45% said they paid less attention as a result. This figure increases to 56% in younger age groups.

We know from our financial wellbeing research that on average, people are not saving enough to afford a comfortable retirement. The drawbacks of auto-enrolment could result in many not achieving the level of comfort they hope for.

What does the impact of auto-enrolment mean?

How businesses communicate pension benefits with employees could play a significant part in inspiring them to engage with their savings.

Our research identified three key types of engagement, which could refine the ways you support your employees with their workplace pensions.

Cognitive engagement

Cognitive engagement involves increasing the awareness and understanding of pension saving and the options available.

  • Only 37% of those surveyed know how much their employer contributes to their pension.
  • 48% would like more guidance from their employer on how much they should save to achieve their retirement goals.

Aegon’s Customer Perspectives hub offers tips and insights on pension saving, retirement planning and everyday money. A Retirement Planner tool could help employees work out how much they’ll need in retirement and how much to save to achieve this.

Affective engagement

Affective engagement is around emphasising the importance of longer-term saving.

  • 47% worry they won’t have enough money when they retire.
  • 84% want to make sure they can keep doing the things they enjoy in retirement.

By increasing interest and motivation in saving, you can help ease any worries your employees may have. A way to do this could be to help them clearly visualise how they want their future to look. Our Financial Wellbeing hub has a range of tools and resources to help them do this. This includes our Picture your best life tool, financial planning templates and tools.

Behavioural engagement

Behavioural engagement focuses on employees taking steps to engage with and stay informed about their pension.

  • 24% say that they only check the amount in their pension once a year.
  • Only 53% actively keep a track of pensions from previous workplaces.
  • 77% of those with multiple pension pots said that it’d be useful to see all pension savings and investments in one place.

There are lots of ways to inspire behavioural engagement. As a first step, encourage employees to activate their online pension accounts and keep their details up to date.

For those who may have lost track of old pensions, the government’s Pension Tracing Service could help. If they want to consider keeping their pension pots in one place, read MoneyHelper’s article on transferring pensions.

Overcoming engagement barriers

Breaking down barriers to engagement may rely on a combination of all three engagement styles. Nudges, personalised information, guidance and tools could all help to tackle some of the fundamental challenges.

You have a central part to play in supporting your employees. But remember, there are wider barriers to engagement within society, and a larger collective responsibility needed to overcome them.

For more tips on engaging employees with their savings, check out our new infographic.

Unless otherwise stated, the figures referred to are based on research conducted by Aegon in partnership with The University of Edinburgh. Responses were from a representative sample of 2,000 UK adults between June to September 2022.

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