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Contributing to employees' pensions pot is key to auto-enrolment, says NEST


Employer contributions are key to staff staying opted in to their auto-enrolment scheme, according to research published today by National Employment Savings Trust (NEST).

NEST has more than 300 employers and 100,000 members. The scheme it provides has had opt-out rates below 10%, which NEST said is lower than expected.

NEST said its research proved that the value of employer contribution and the "simple reassurance" of employees knowing they have put something aside are crucial motivators to staying in a scheme.

More than half (67%) of employees surveyed by NEST agreed they can stop worrying they hadn't done anything about their retirement.

Graham Vidler, director of communications and engagement at NEST, said: "This insight and the low opt-out rates are promising.

"Although the research suggests half of unpensioned workers claim to have only a basic knowledge of pensions, our big challenge, as an industry, is to make sure that workers understand the benefits of employer contributions and recognise them for what they are."

He added: "A helping hand from your employer to save for your future. Combined with tax relief, they can double the value of an individual's contribution."

Last week the Association of British Insurers (ABI) said the pensions industry must do more to "regain the trust" of the Government and regulators.

Stephen Gay, ABI director of life, savings and protection, said politicians were "sceptical" over whether the pensions industry had customers' "best interests at heart".

Speaking last Friday at the PIMS conference 2013, Gay said in the past the industry had not always proved it was on the same side as the consumer.

He said: "If the industry does not demonstrate that it can find workable solutions to the pensions problem the government will go ahead without it."

"The Government has decided that the industry will play a role in these reforms and this affords it a significant opportunity.

"The current pensions minister [Steve Webb] is both supportive and challenging of the industry's advances but the Labour party remains sceptical on pension charges, transparency and governance. These issues are shaping the pensions debate."

He added: "It is up to us to show that we're worth being included. We face some tough exam questions. We must show we're on the side of the customer and that we can demonstrate they aren't being enrolled into poor or high charging schemes."