The Financial Conduct Authority has warned that more than 15 million people in the UK still have no pension savings, despite the introduction of workplace pensions.
Its latest Financial Lives survey questioned 13,000 consumers revealing that 31 per cent of people had no private pension provision, leaving them to rely solely on the state pension of up to £159.55 per week.
Worryingly, many people aged over 50 revealed that they were not paying into a pension. Of those in this age group who said they had no private pension, 32 per cent believed it was too late to set one up, 26 per cent said it was unaffordable and more than 10 per cent stated that they were relying on their partner’s pension.
Despite the notable success of auto-enrolment, which has so far brought over 8 million into qualifying pension schemes, thousands of self-employed and part-time workers are being left behind. These workers are not able to benefit from the regime due to current legislation which prevents them from meeting the necessary criteria.
The figures also revealed a disparity between men and women, with 33 per cent of men expecting to retire with just the state pension, rising to 53 per cent for women.
Looking at the types of pensions people would benefit from, the survey showed that only 16 per cent of working people have a final salary pension, while 41 per cent will rely upon a defined contribution (DC) pension.
Of those on DC pension schemes, around 40% have less than £5,000 of savings and only 12 per cent have more than £100,000. In addition, around 50% of the people who have so far accessed their DC scheme have reported that it is not enough to live on.
Scarily, the report also notes widespread pension confusion, with just six in 10 adults aged 35-44 knowing how much their company pays into their pension pot.
Elaine Shaw, Payroll Manager at George Hay, said: “It is important to acknowledge the impact that auto-enrolment has had on retirement saving – more than 8 million people are now actively putting money aside for their life after work.”
“However, we also can’t deny that there is still progress to be made when it comes to workplace pensions.”
“Ideally, the benefits afforded by auto-enrolment should help as much of the population as possible. The Government and regulators must continue to make the promotion of saving for later life a priority and look at ways to bring excluded parties into the scheme.”
Here at George Hay we’re thrilled to have helped hundreds of our clients to navigate auto-enrolment successfully, with the roll-out soon to reach its conclusion. With new rules now applicable to those who employ staff for the first time on or after 1 October 2017 and pension contribution increases scheduled for April 2018, it is vital that employers remain aware of legislation as it changes and how this impacts upon their legal duties to employees.
We do, however, recognise that complying with new rules, as well as efficiently handling the payroll function day-to-day, can be a concern for many businesses. So, if you’re panicking about pensions duties, or anxious about the new auto-enrolment rules, we can help you take the first step towards making your payroll a priority – call us on 01767 315010.