Legal & General consumer research shows older employees say they will opt out of auto enrolment.
12 July 2011
The qualitative research*, which used face to face interviews, was completed in May. Respondents were aged between 22 and 50+ and were all earning over £7,000 per annum but not yet enrolled into a company pension scheme.
The research shows that awareness of auto enrolment is low but it is viewed as a significant change. Employees believe that their employer will provide them with the information they need at the appropriate time. They also expect to receive guidance from their employer and anticipate that their workplace web site will play a crucial role in both assisting in their decision making and helping them through the auto enrolment process.
Legal & General’s Operations Director Workplace Savings, Ian Mahoney commented: “Our research shows that there is a significant level of trust among employees that their employer will guide them through what they clearly believe is an important change. This places a heavy responsibility on companies of all sizes to make sure they deliver effective communications when implementing auto enrolment. As well as traditional methods of communication such as letters to individuals, employees will expect to be able to go online for information that will help with their decision process. They also expect to communicate that decision through the company’s web site.”
Employees appear to prefer using web sites for the ‘remain in/opt out’ decision process because they expect to receive instant acknowledgement that their decision has been registered. Telephone and post, though still important for some, appear less popular.
Many of the respondents without a pension viewed AE as a much needed “nudge” to start saving. Interestingly they are concerned that they lack knowledge and will need guidance about choices, especially around how to invest in their pension.
Ian added: “The research found that the youngest age group, those between 22 and 30, would be the hardest to engage with on pensions and may be most likely to ‘opt out’. Older staff, aged 30 to 40 years, who are not yet a member of the company scheme are likely to be nudged into an ‘opt in’ decision. Worryingly the respondents in the oldest age group, the 50s and 60s, said they would be more likely to ‘opt out’ and rely on the state pension.”
In November last year Legal & General Workplace Savings launched WorkSave Choice, which is an online web platform that guides employees through the remain in/opt out process and helps to ensure employers fulfil their obligations, whatever route the employee chooses to go. The WorkSave platform also provides an interactive employee engagement programme, “The Cash Family Challenges” to help employees discover how to make informed financial decisions about managing their own savings both in and out of the workplace.
Notes to editors
*Note: Research was conducted by NMG across the UK between 12 and 25 May. It involved 69 interviews with employees from a range of firms with between 50 to 500 staff. Each interview lasted 75 to 90 minutes plus each respondent was required to complete a paper questionnaire.
The Legal & General Group, established in 1836, is one of the UK’s leading financial services companies. As at 31 December 2010, we were responsible for investing £365 billion worldwide on behalf of investors, policyholders and shareholders. We also had over seven million customers in the UK for our life assurance, pensions, investments and general insurance plans.
Legal & General Workplace savings was awarded Group SIPP Provider of the year, 2010, in the Pension & Investment Provider Awards.
The Legal & General WorkSave Platform is provided by Legal & General Assurance Society Limited.
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