Legal & General consumer research shows around a third of employees will opt out of auto enrolment into a workplace pension.
08 September 2011
The research*, which was completed in July, asked 107 people who qualify for auto enrolment (AE) whether they would stay in a company pension scheme or opt out after they had been given a description of the AE process.
Would you stay in the auto enrolment process or opt out?
The results were as follows:
Stay in - 46%
Opt out - 33%
Don't know - 21%
These results indicate a slight improvement compared to a similar study that was done when the Government announced its plans for Personal Accounts (which later became the National Employment Savings Trust) in August 2007.
Legal & General asked 432 consumers who would qualify for a Personal Account, whether they would stay in or opt out of their workplace pension. Then 37% were likely to opt out (higher among men = 42% than women = 30%), 44% were likely to stay in while 19% could not make up their mind (don’t know).
Legal & General’s Operations Director Workplace Savings, Ian Mahoney commented: "Our research shows that the proportion of the workforce that are likely to opt out of the auto enrolment process when it kick starts in October 2012 has not changed much in the last four years. This is despite a significant level of publicity around the launch of the National Employment Savings Trust and the run up to the start of auto enrolment by the DWP. We found that awareness among employees who are eligible for auto enrolment is quite low with less than a third (29%) saying they had heard anything about it.
Interestingly - even among those who seem to be aware of AE there is confusion about what it means - many think AE only applies to those who have no pension provision at all. Hardly anyone is aware that staying in the AE process means signing up to a minimum contribution from their current salary."
In depth interviews** completed by Legal & General among employees who are not yet signed up to their company pension, indicated many of the respondents without a pension viewed AE as a much needed ‘nudge’ to start saving. The in depth 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 members of the company scheme are likely to be nudged into an ‘opt in’ decision. 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.
*Research was conducted on behalf of Legal & General by JointheDots between 11 and 27 July. It involved 107 respondents (106 with an employee pension) from the Legal & General consumer online panel. Each respondent was shown a description of auto enrolment explaining timescales, who is eligible and required contribution levels before being asked about whether they would opt out.
** 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.
Notes to editors
- The Legal & General Group, established in 1836, is one of the UK’s leading financial services companies. As at 30 June 2011, we were responsible for investing £370 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.
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For more information please contact:
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