Families fail to take up workplace pensions

Posted on May 26th, 2011 | Categories - Pensions

Two fifths of families say they cannot afford to pay into a pension.

Many workers would be happy to pay in to a pension if their employer contributed as well.

The majority of British families are not paying into a workplace pension scheme, according to new research from an insurance firm.

The Aviva Family Finances Report revealed that just 28% of families contribute to their work pension. The majority of the other 72% said that affordability was one of the main reasons why they did not have a pension.

Two fifths of all respondents said they cannot afford to belong to an existing workplace pension scheme. Others said their company has not told them enough about the pension options open to them and 10% said they were worried about the return on their investment. One in ten respondents said they just hadn’t got round to getting a pension yet.

However, almost three quarters of participants said they would be happy to join a scheme if their employer matched their contributions. Just 15% of people said they would opt out of the auto-enrolment scheme that is set to be implemented from 2012 – as part of the initiative all bosses will have to automatically enrol their staff members into a pension unless they actively state otherwise.

Paul Goodwin, head of pensions marketing, Aviva, said: “The UK is facing one of the largest pensions crises in Europe so it is vital that we consider what can be done now to help customers plan their retirements for the future. As the Government has recognised by its planned auto-enrolment programme, workplace pensions have a significant role to play in meeting this challenge”.

He continued: “There is much work to be done though as only 28% of UK family heads are currently paying into a scheme. And while many people cite affordability as a reason for not joining, our research suggests that for many funds are available, but are often prioritised elsewhere”.

He added that a lack of understanding is hampering pension take-up rates and more needs to be done by the government to ensure that the auto enrolment system becomes a success.