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Auto-enrolment is a relief for employees worried about retirement plans, NEST report reveals

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Despite economic difficulties, employees welcome auto-enrolment as many haven’t made long-term saving a priority, a report published today by National Employment Savings Trust (NEST) reveals.

The report found 63% of UK employees agree with the idea of auto-enrolment, despite finding the current economic climate difficult.

However, the report also revealed many employers are not giving themselves enough time to get ready for auto-enrolment. It found less than half of employers with fewer than 5,000 workers have confirmed their provider.

According to the report, employers highlight administration, pension scheme choice and how to communicate the changes to their workforce as being top of their list of concerns.

Tim Jones, NEST chief executive said: "Auto-enrolment represents a massive opportunity to improve pension participation as pensions go mainstream, and our research tells us that this is what most consumers want. 

"Given the current economic constraints on the household budget you might have expected opposition from consumers for auto-enrolment but our research strongly suggests that they welcome the policy.

"A fear of making the wrong decision has put many people off joining a pension in the past. However, the knowledge that their pension is being taken care of through a low-maintenance approach driven by their employer gives savers peace of mind. Whether the level of contributions will be enough to meet their aspirations is a conversation for further down the line, but auto-enrolment is a great start."

Jones added: "We are calling on everyone in the industry to work together to help employers prepare, and ensure employers can be confident that implementation will work well. This will be particularly important during 2014 when thousands of employers come on board within a few months of each other."

 

Law firm Hargreaves Lansdown said NEST's research proves there is still a "considerable" amount of work to be done in convincing individuals of the benefit of saving for retirement.

Tom McPhail, head of pensions research, Hargreaves Lansdown said: "The problem is that for most people, the default auto-enrolment contributions will almost certainly not deliver a pension which will meet their expectations. For example, a 35 year-old earning £30,000 a year would probably have to save an additional £316 a month on top of their statutory minimum contributions to hit a target pension of two-thirds of their pre-retirement earnings.

"For employers the big challenge is still to prepare for auto-enrolment. In spite of DWP efforts to make the process as simple as possible, the Pensions Regulator has acknowledged that most employers will need help in complying with the legislation so the sooner they start to address their responsibilities, the better."

 

NEST's report draws on five years' worth of research and evidence from a number of sources, including its own in-depth research.