Making it 'personal' is critical to retirement saving in the UK

Article date: 1 October 2012

  • Automatic enrolment signals a new era in workplace communications

Britain’s employers hold the key to getting the nation’s workers saving for their retirement, but to be successful they will need to find innovative ways of discussing money matters in the workplace - Aviva has said.

From today (1 October 2012) workers employed by the UK’s largest firms (those employing more than 120,000 people) will start being automatically enrolled into company pension schemes. And between now and 2018 all other employers will have to ensure UK-based workers aged over 22 years and earning a minimum of £8,105 (for the current tax year) are also enrolled into a pension.

Aviva’s managing director of corporate benefits, Graham Boffey, has urged all employers to consider their pension options carefully before deciding on the best solution for their business and employees. Working closely with employees to actively engage them on how they could personally benefit was also essential to the success of automatic enrolment.

“We know from our Aviva Working Lives Report* that showing people how to save more or explaining the benefits of workplace saving is useful, but employees also want information that is specific and relevant to them,” Mr Boffey said.

“Employees are telling us that that they would be more likely to save for their retirement if they were ‘personally’ shown what they need to save. Automatic enrolment will potentially transform the type of discussions employers and employees are having in the workplace about their finances.

“This personalisation of information is going to prove critical over the next few years, and we’re likely to see an increase in demand for new techniques and technology which enables an employee to really consider their pension contributions against all of their, and their family’s, specific financial commitments.”

Aviva’s Working Lives Report (published May 2012) identified the key challenges employers and employees face in kick-starting Britain’s savings culture. The research found that over a third (37%) of employees (aged 22 years and over, and currently without a pension) think they will opt out of an automatic enrolment workplace pension, but 43% of employees currently without a pension said they would remain within the scheme once enrolled.

Even if around a third of employees do opt out of a company pension scheme, automatic enrolment could bring about 7 million workers into a pension scheme for the first time, a strong start for an initiative that will help to close the massive pensions gap in the UK. In 2010 the UK pension gap was calculated to stand at £318 billion or £10,300 per person, per year in the UK for those retiring over the next 40 years**.

Working Lives key findings - published in May 2012:

  • 70% of employers aware of pension reform changes, but 68% of employees have little or no knowledge.
  • 56% of employees agree pensions are the best way to save for retirement but 55% of employees say they don’t have the cash.
  • Responding to different forms of employee engagement, 22% of employees said they would be most likely to save more for their retirement if ‘someone showed me what I personally need to save’, compared to 12% ‘if someone showed me how to manage my money better’ and 11% ‘if someone showed me the benefits of saving’.
  • Indicating there is room for communications improvement, 33% of employees also said they would be most likely to save for retirement if pensions had better or clearer financial incentives (tax relief or matched contributions).
  • The Savings Engagement in Employment (SEE) Index shows significant room for improving employers’ and employees’ levels of awareness, ownership and enthusiasm for workplace saving. Scores were 29 out of 100 for employees and 38 out of 100 for employers.

* The Aviva Working Lives Report was designed and produced by Aviva, with Wriglesworth Research in association with Opinion Leader. As part of this, 2,004 private sector employees and 210 employers were interviewed in the first quarter, 2012.

 It was first published in May 2012, and the second Working Lives report is due out in Q1 2013.

** Aviva/Deloitte – Pensions Gap – September 2010. The annual pensions gap is the difference between what is needed to live comfortably in retirement and actual expected income.

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If you are a journalist and would like further information, please contact:
Diane Mangan - Aviva Press Office
Mobile: +44 (0)7800 691714 
Email: diane.mangan@aviva.co.uk

Fiona Robertson - Aviva Press Office
Mobile: +44 (0)7800 692299 
Email: fiona.robertson@aviva.co.uk               

Notes to editors:

Aviva provides insurance, savings and investment products to 43 million customers worldwide.

We are the UK’s largest insurer with over 14 million customers and one of Europe’s leading providers of life and general insurance. We combine strong life insurance, general insurance and asset management businesses under one powerful brand. We are committed to serving our customers well in order to build a stronger, sustainable business, which makes a positive contribution to society, and for which our people are proud to work.

We are ranked as one of the UK’s top 10 most valuable brands and Aviva plc is in the top 10% of socially responsible companies globally in the Dow Jones Sustainability World Index.  In 2011 we invested £5.3 million into our UK communities. One in three of our employees were involved in community investment activities which included giving nearly 33,000 hours. 

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