Three quarters of employers think their employees aren’t saving enough for retirement. Three quarters believe the best way to solve low saving levels is through financial education. Half of employers either underestimate or don’t know how much their employees should be saving for retirement. 25 percent of employers are looking to increase their pension contributions, with only 2.4 percent planning a reduction. 71 percent of employers use salary sacrifice, of which a third share their NI saving with staff. Data from Hargreaves Lansdown research of over 700 employers – January 2016.
Nathan Long – Senior Pension Analyst; ‘The more you pay into your pension, the more you get at retirement – a fact that may be painful to hear for those who already find their pay packets stretched. Unfortunately three quarters of employers believe their staff are not putting enough away each month. The reality is worse still, as a large proportion of employers underestimate the amount that should be saved.
Employees need to do a bit more than hope they’ll be alright because they’ve been enrolled into their company pension. Using a pension calculator to understand how much extra they will get by saving a little more now is time well spent. Even saving an extra £10 per month could be enough to kick off retirement with that holiday of a lifetime, or help keep the wolf from the door throughout retirement. Staff at the majority of firms can make contributions free from tax and national insurance using salary sacrifice. Any change to pension tax relief in the upcoming budget could render salary sacrifice unworkable, leaving employees worse off and employers with a lot of unravelling to do.‘
Putting more in employee pension pots
Employers favour financial education to ramp up employee saving levels, although there is support for increased automatic enrolment minimum levels and introducing auto-increases to employee contributions.
How much do employers think their staff should be saving?
Paying more than 12 percent of salary throughout their working life should leave most people reasonably placed when they come to finish working. Of course, savings levels are personal to each individual, a comment that was made repeatedly by many employers who responded to the research.