Since the workplace pension scheme reform in 2012 significant progress has been made to ensure employees have saved enough for retirement. However, calls have been given for the improvement of financial education and guidance to persuade individuals of the merits of saving more for their retirement.

Workplace pensions: What has been done?

Jonathan Watts-Lay, director, WEALTH at work, a provider of financial education, guidance and advice in the workplace, welcomed the news that more than eight million employees have signed up for a workplace pension since the launch of automatic enrolment in October 2012.The annual total saved by eligible savers was £87.1 billion in 2016 – an increase of £3.8 billion on the total amount saved in 2015.Mr Watts-Lay said, “It’s easy to get carried away with the small successes of auto-enrolment, rather than focus on the work that still needs to be done to encourage individuals to save more for their retirement.”The minimum contribution rate for defined contribution pension schemes, personal pension schemes and some hybrid schemes are being phased in over time, and will increase from a minimum of 2 per cent overall (with at least 1 per cent from the employer) to a minimum of 5 per cent overall (with at least 2 per cent from the employer) in April 2018.Minimum contribution rates will increase again in April 2019 to a minimum of 8 per cent total (with at least 3 per cent from employers). This is below the contribution levels required by many individuals to enjoy a comfortable retirement.

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Auto-enrolment the first step

Mr Watts-Lay added, “As much as auto-enrolment is a positive step, there is clearly still a long way to go until we are at a stage where the majority of employees are producing adequate savings for financial security at-retirement.“Retirement might seem a long way off for many, but individuals really need to think about how they are going to fund their future income as early as possible, to get a better understanding of what they need to be doing now.“Saving more now or working longer than planned could make a real difference to retirement income, the value of well thought out planning from early on should not be underestimated.“Financial education and guidance delivered in the workplace is crucial to help individuals set and achieve their financial goals, giving them more control over their finances, and ultimately their retirement plans in the future.“It is only when this is delivered and individuals genuinely understand the long-term benefits of saving more for retirement that auto-enrolment can be considered a true success.“We urge individuals to demand more retirement-related support from their employers and we call on business leaders to step up and respond to these demands, not least because they are fully aware of the issues at hand.“As WEALTH at work research found, only one in 10 UK employers believe that their employees are saving enough for their retirement.”Read all the latest relocation news in our Autumn 2017 magazine.For related news and features, visit our Employee Finance section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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