Employers need to do more to educate workers about their pension benefits in order to tackle problems of under-saving for retirement.
Wealth at work, a specialist provider of financial guidance in the workplace, claims many employees remain unaware of contribution matching arrangements, which see employers increase their contributions, if employees make more than the minimum contribution level.
It says some individuals are either not aware of this “free” additional money from their employer, or don’t understand how much they need to save into a pension to provide a better income in retirement.
It also cites a recent Pensions Policy Institute report calculated that there may be 12m individuals who are under-saving for retirement.
Wealth at work director Jonathan Watts-Lay says: “Much more needs to be done to persuade individuals to save more for retirement, and help them to understand what help is available.”
“Auto enrolment has been a great start in getting more individuals to save into a pension for the first time. But some people may believe that the current contribution rate of 8 per cent is the ‘right’ amount and not consider paying more.
“Our experience is that there are many pension schemes where employers offer very generous pension contributions, and individuals could take advantage of this through matched contributions.
Watts-Lay says financial education plays a fundamental role in helping employees understand their options. He says while this information may be available on company website and benefits portals, many employees benefit from face-to-face guidance, through seminars and, where needed as more individual advice.This is more likely to get them engaged with relevant pension decisions, he says.