Who Saves for Retirement? 2: Eligible non-savers

Beyond Auto-enrolment

New research and policy analysis on workers who reject workplace pension saving.

The government’s auto-enrolment reforms to workplace pension saving, which began a rolling implementation in October 2012, seek to boost rates of participation in pension saving across the UK workforce.

However, policymakers have always known that some workers would continue to reject workplace pension saving, even when employer contributions are available.

To help inform policymakers seeking to minimise the rate of ‘opt-outs’, this research uses detailed data from the Wealth and Assets Survey to understand why workers reject the chance to save into a workplace pension with employer contributions.

The research was undertaken in partnership with the Institute for Social & Economic Research (ISER) at the University of Essex, and was made possible by the kind support of Prudential.

The analysis found:

  • Around one-in-ten workers were ‘eligible non-savers’ who did not save into their workplace pension with employer contributions;
  • The most powerful single predictor of being an eligible non-saver was being a renter, in addition to gender, age and education;
  • In addition to objective characteristics, a worker’s attitudes (for example, to investing in property) and financial management (such as having money leftover at the end of the month) represented strong, independent predictors of being an ‘eligible non-saver’.

A full report of the research can be downloaded here: Who Saves for Retirement 2 Eligible Non-savers

Authors: Dr Mark Bryan, Institute for Social & Economic Research, University of Essex and James Lloyd, Strategic Society Centre

Who Saves for Retirement 2 Eligible Non-savers represents a second phase of research to Who Saves for Retirement?, published in 2011.

Alongside this research, the Strategic Society Centre has published a policy discussion paper to provide accompanying policy analysis and recommendations: Beyond Auto-enrolment: Eligible non-savers and the opt-out opportunity

This report builds on the findings of Who Saves for Retirement 2 Eligible Non-savers to explore what the government can do beyond auto-enrolment and other aspects of the post-2012 reforms to maximise participation among workplace pension opt-outs. The report proposes:

  • Regular statements of lost contributions for those who opt-out of their workplace pension;
  • Targeted financial management and advice for opt-outs identified as having poor financial management skills;
  • Giving opt-outs the chance to reclaim lost employer contributions if they commit to rejoin their workplace pension and remain in it for a defined period.

More widely, the paper argues that policymakers should not see the decision of workers to opt-out as the ‘end of the story’, but should use this self-defined status and growing evidence on why workers reject workplace pension schemes with employer contributions, to deploy targeted interventions that nudge workers to opting back-in.

Author: James Lloyd, Strategic Society Centre

You can read about this project in the Daily Express and Pensions Age.

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