Majority of UK workers think they should double pension contributions
12 March 2015
A new CIPD report reveals that the average employee contribution to a workplace-defined contribution pension scheme is currently 5 per cent, but most employees think they should be saving 9 per cent.
The report, Employee Attitudes to Pay and Pensions, from the CIPD, the professional body for HR and people development, is based on a survey of 2,255 working adults.
Other findings include:
- 43% think they should be contributing more than 10% of their salary to their retirement savings
- 22% admitted they didn't know how much they should be contributing
- 13% are worried that they will never be able to afford to leave paid employment
- 40% of employees said they want to reduce their hours gradually from full-time to part-time when they plan to retire from paid employment
- 32% plan to work full-time right up to retirement
- 15% haven't thought about how they will retire.
Charles Cotton, Reward Adviser for the CIPD, said:
"The looming pensions crisis cannot be ignored any longer. Auto-enrolment has been successful in getting six in every ten eligible workers saving through a workplace scheme, but their ability to contribute adequately is being severely hampered by poor wage growth. Until the Government and businesses can tackle the root causes of the UK's productivity challenges, we won't see the wage growth needed to improve individual pension contributions and people may need to stay in work a lot longer to have a sufficient income.”
The survey also found that the size of a business has a considerable impact on the individual's ability to save for a pension and the age at which employees expect to retire. Workers in medium- and large-sized businesses expect to retire at 65, rising to 66 in small businesses and 68 in micro businesses. Those who aren't saving through a workplace pension scheme (typically those in smaller businesses) expect to stop work at 67, with 7% anticipating they will have to work past the age of 70. In addition, the CIPD's research found that 76% of employees working for a micro employer and 60% of those working for small businesses are not enrolled in a workplace pension scheme.
To view the full report, follow this download link Employee Attitudes to Pay and Pensions
The second phase of the CIPD's Employee Attitudes to Pay and Pensions 2014 survey, focusing specifically on pay and performance, will be launched later this month (March 2015).
Out-Law.com reported this week that Lord Hutton, whose 2011 report on public sector pensions led to fundamental reform of the system, said that workers should be putting away at least 15% of their income to fund their retirement. This figure, which is almost double the planned minimum contribution under automatic enrolment legislation, was one of the main recommendations of a new report by Hutton.