76% of employers do not think their employees are saving enough for retirement
More than three quarters (76%) of employers do not think their employees are saving enough for retirement
Hargreaves Lansdown's research found that 76% of respondents thought the best way to deal with low contribution levels would be to educate their employees on how much they need to save. Just under half (46%) thought that the government should increase minimum contributions further. Employers adopting systems allowing employees to automatically increase contributions each year was selected by 31.9%.
When asked how much, including employer contributions, employees should save each year to achieve a comfortable retirement, 0.5% thought that below 4% was acceptable, while 28% said more than 16%.
Within the next five years 25% of employers are looking to increase their pension contributions, with only 2.4% planning a reduction.
Nathan Long, senior pension analyst for Hargreaves Lansdown, said the fact that the more you pay into your pension the more you get at retirement “may be painful to hear for those who already find their pay packets stretched".
“Unfortunately three-quarters of employers believe their staff are not putting enough away each month,” he said. “The reality is worse still, as a large proportion of employers underestimate the amount that should be saved.
“Employees need to do a bit more than hope they’ll be alright because they’ve been enrolled into their company pension,” Long added. “Using a pension calculator to understand how much extra they will get by saving a little more now is time well spent. Even saving an extra £10 per month could be enough to kick off retirement with that holiday of a lifetime, or help keep the wolf from the door throughout retirement."
He added: "Staff at the majority of firms can make contributions free from tax and national insurance using salary sacrifice. Any change to pension tax relief in the upcoming budget could render salary sacrifice unworkable [however], leaving employees worse off and employers with a lot of unravelling to do."