Confusing Pension Jargon Deterring Staff Saving
One in three employees is put off saving for retirement because they find pension jargon confusing, research by the National Employment Savings Trust (NEST) has highlighted.
In the NEST poll of nearly 2,000 adults, just 6 per cent found pensions straightforward, while 57 per cent admitted they did not understand the best options open to them because pension advice was so complicated.
With workplace auto-enrolment schemes due to start for big businesses this October, the results suggest that small firms must do more to raise awareness of pensions among staff.
“Millions of people are due to start saving for their retirement for the first time through automatic enrolment,”
said NEST chief executive Tim Jones.
“Getting the language right is a challenge all pension providers will need to tackle.”
However, many small firms “still had no clear idea” of their obligations on workplace pension schemes, according to the Institute of Directors (IoD).
“Many employers are unaware that they will be required to set up and fund employee pensions,”
said IoD director general Simon Walker.
“One in five of our members did not even know the legislation was coming into effect.”
The Forum of Private Business (FPB) said that details of workplace pensions “had been massively under publicised” and that few employers were aware of the auto-enrolment timeline.
“The main concern is not about cost, but what small firms are being asked to do,”
said FPB policy adviser Phil McCabe.
Under the new rules, firms with fewer than 50 employees will not have to enrol staff on to pension schemes until May 2015 — a delay of one year on the original deadline, following the Department for Work and Pensions (DWP) announcement in November — but larger firms will still be required to start auto-enrolment in October 2012.
A DWP spokeswoman said that the Pension Regulator would “be in touch with every small business about a year before auto-enrolment was due to start”, and that small firms would be given ample opportunity to prepare.
“It’s still too far ahead to set out exactly what small firms will need to do, which has possibly contributed to the low awareness amongst small firms,”
said the spokeswoman.
“We need to engage businesses on this at the right time.”