Pensions don’t normally make for sexy conversation, but they’re set to be a hot topic for lots of small UK companies this year. Why? Because companies are about embark on a process known as ‘staging’ – i.e. they’ll be working to meet the legal deadline for offering a workplace pension.
Stay with us on this one – it’s about to get good. ‘Staging’ is important because in the rush to meet the deadline, millions of employees will be forced to contribute to a pension for the first time. Cue mass panic.
Second only to the excitement of Transfer Deadline Day, the staging window mania moved us to run a pension-related survey. And as pop-up clickbait headlines often say, You Won’t Believe What Happened Next…
The poll found that almost half (48%) of employees who are not currently paying into a pension have no idea how the new workplace pension will impact their pay packets. The survey also showed that more than a quarter (27%) of UK employees not yet paying into a pension are worried that being forced to contribute to one will put extra pressure on their finances.
Part of the problem is that a worrying number of those without a pension have no real understanding of what auto-enrolment will cost them, and a further 43% were unaware that they could opt out of the workplace pension. Our findings led us to the natural conclusion that no one knows anything about how this system works.
Pension opt outs
So the government is in a bit of a pickle: 15% said they intend to opt out immediately, and more than half (54%) said their contribution level will determine if they opt out or not. It’s not what you’d call a ringing endorsement.
But whose job is it to educate ‘the workers’? Who will teach us the intricacies of the available pension schemes? Unsurprisingly, ‘the government’ came top of the list, with ‘my boss’ slinking in at number two. They better get going, then.
To date the Government’s £44 million (yikes!) marketing focus has been on getting business owners to embrace the workplace pension. But while auto-enrolment is a big deal for today’s smaller businesses, it’s an even bigger deal for their employees, half of whom are still in the dark about how it will affect their take-home pay.
Another worry is that, while people need to save for their futures, should they do so if it puts significant strain on their finances today? Auto-enrolment is a fantastic idea in principle, but what its effects will be in practice we are yet to find out.
For those who are interested in finding out what impact the new pension will have on their pockets, we have developed a very simple online workplace pension contributions calculator. Simply tap in your date of birth and your annual salary and the answer pops out immediately – oh and of course it’s free!