Study Finds: Workplace Pension Savers Twice as Likely to Be Disengaged in Auto-enrolment Scheme (2023)

Study Finds: Workplace Pension Savers Twice as Likely to Be Disengaged in Auto-enrolment Scheme (2023)

Unravelling the Impact of Auto-enrolment on Workplace Pension Engagement

A recent study has shed light on a concerning trend within workplace pension schemes, revealing that savers enrolled through auto-enrolment are significantly more likely to disengage from their retirement planning. This finding underscores the need for employers and policymakers to re-evaluate and enhance their strategies to foster financial well-being among their workforce.

The study, conducted by National Employee Savings Trust, examined the behaviour of over 10,000 workplace pension savers in the United Kingdom. The results showed that 44% of those who were automatically enrolled in their workplace pension had taken no action to increase their contributions or make any other changes to improve their retirement savings. In contrast, only 21% of those who had actively opted in to their scheme had remained disengaged.

This disparity in engagement levels highlights the importance of providing employees with a clear understanding of their workplace pension scheme and empowering them to make informed decisions about their retirement savings. Auto-enrolment has undoubtedly increased pension coverage rates, but it is crucial that employers go beyond the bare minimum and actively support their employees in grasping the scheme's intricacies and the long-term implications of their savings choices.

The study also identified a correlation between disengagement and lower levels of financial literacy. Savers who struggled to understand basic financial concepts were more likely to remain passive in their approach to workplace pensions. This underscores the need for employers to incorporate financial education into their employee engagement strategies. By providing employees with the tools and knowledge they need to navigate the complexities of retirement planning, employers can empower them to take ownership of their financial futures.

Bridging the Engagement Gap: Empowering Workplace Pension Savers

Addressing the disengagement gap in workplace pension schemes requires a multifaceted approach that involves employers, policymakers, and the pensions industry. Here are some key steps that can be taken:

1. Personalize Communications: Tailor communication materials to each employee's specific situation and financial literacy level. Use clear and concise language, avoiding jargon and technical terms.

2. Leverage Technology: Utilize digital platforms and online tools to provide employees with interactive and accessible information about their workplace pension scheme. Consider offering personalized savings calculators and financial advice services.

3. Promote Active Enrollment: Encourage employees to actively opt in to their workplace pension scheme rather than relying solely on auto-enrolment. Provide incentives and support mechanisms to facilitate this transition.

4. Offer Financial Education: Incorporate financial education into employee training and development programs. Partner with external providers or develop in-house resources to enhance employees' understanding of retirement planning and investment principles.

5. Foster a Culture of Engagement: Create a workplace culture that values financial well-being and encourages employees to engage with their workplace pension scheme. Share success stories, recognize employees' financial literacy achievements, and provide opportunities for them to discuss their retirement goals.

Empowering Employees, Securing Financial Futures

By adopting these strategies, employers and policymakers can empower workplace pension savers to become more actively engaged in their retirement planning. This will not only improve individual financial outcomes but also contribute to a more secure financial future for society as a whole.

If you are concerned about the engagement levels in your workplace pension scheme, Fundingo can help. Our loan management or origination or servicing software or systems can help you streamline your operations and free up your time to focus on engaging with your employees. To learn more and schedule a demo, call us toll-free at (877) 227-7271 or visit Fundingo.com.

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