A new study by Aviva has found that only 50 per cent of the 2,007 people it surveyed would definitely stay ‘opted in’ to a workplace pension scheme following a rise in minimum contributions.
From April 2018, minimum pension contributions will rise from the current two per cent (typically one per cent from the employer and one per cent from the employee) to five per cent (three per cent from the employee, two per cent from the employer), followed in April 2019 by another increase to eight per cent (five per cent from the employee, three per cent from the employer).
In light of this rise in contributions, roughly a third of employees (34 per cent) said they were unclear on what they would do, while 12 per cent said they were considering leaving the scheme.
Only one in 25 (four per cent) said they would opt out of their workplace pension altogether, showing a growing demand amongst workers to save for their retirement.
More than 8.5 million employees have signed up for a workplace pension since they were introduced, with workers saving £87.1 billion into schemes in 2016, according to the Department for Work & Pensions.
If the data is combined and extrapolated, it suggests that more than 340,000 people could leave their workplace pension scheme when contributions rise in April 2018.
Despite this, Aviva is calling on the Government to consider raising the minimum contributions to 12.5 per cent within the next decade, with Colin Williams, its Workplace Managing Director saying the five per cent increase due next year was “well short of the level” the firm believed is necessary.
These articles are of a general nature and are not a substitute for professional advice. No responsibility can be accepted for the consequences of any action taken or refrained from as a result of what they contain.