Plan Sponsor Contributions Could Be Key To Creating Pensions Savings Culture
24 July 2012 (PLANSPONSOREurope.com) - Plan sponsor contributions could prove the catalyst to creating a pensions savings culture in the UK, according to Martin Palmer, Head of Corporate Benefits Marketing at Friends Life.
Palmer’s comments follow Friends Life Research which shows:
• 49% started paying into their pension before the age of 25, 78% started paying in before the age of 35;
• Men were more likely to start paying into their pension before 25 than women – 55% compared to 37%;
• Those who started paying in to their pension before the age of 25 are more likely to claim they understand their pension than those over the age of 25 (61% of those who started saving before 25 understand their pension compared to 39% of those who started saving over the age of 25).
When asked about contributions, 68% said they pay the highest possible amount into their employer pension, while 1 in 10 said they didn't know if they did.
• The majority of those surveyed (64%) plan to retire around 60-65 years old. 27% expect to retire after the age of 65;
• Only 37% believe they are currently saving enough to fund their retirement;
• 24% of those surveyed have revised the age they plan to retire. Plans have changed as a result of changes to when they will receive state pension (31%) and concerns about having enough money to live on (26%).
• 68% believe they will increase their contributions in the future
• Those who don't think they will increase contributions in the future blame insufficient funds/other commitments (43%), believe they are already well covered (16%), prefer to develop alternative investments/savings (12%) or are put off by negative information about their returns (10%).
Palmer says: "It's interesting that so many panellists would recommend starting a pension before the age of 25. Whilst employees at the start of their careers will have other financial commitments, perhaps saving for a house deposit or repaying student debt, the vast majority of the panel advocate starting retirement saving at an early age.
As the largest employers start auto-enrolling eligible employees into a pension scheme from October 2012, employees over the age of 22 will be able to take advantage of employer contributions alongside their own to help get them in the savings habit, which may be the catalyst to help young people take advantage of our panelists' advice."