A survey of workplace pension savers by Aviva has found strong backing for higher contribution levels. Under auto-enrolment (AE) the current minimum pension contribution for an employee and their employer is just 2% of salary (including tax relief), rising to 5% in 2018 and 8% in 2019.
However, research from Aviva has found that more than half (52%)1 of people currently saving into a workplace pension would be willing to contribute more than 5% of their salary themselves, with almost a third (29%) saying they would pay in 10% or more2.
This willingness to contribute above the AE minimums is mirrored by employers among Aviva’s own larger workplace pension clients. Two thirds (68%) of employers surveyed3 said they would be willing to pay more than the 3% of an employee’s salary that will be asked of them in 2019. And 1 in 7 (13%)4 said they would be willing to contribute 10% or more to their employee’s pension.
Despite a perceived resistance to AE by smaller businesses, 43% of Aviva’s own SME clients who were surveyed said they too would be willing to pay in more than the 3% minimum employer contribution that will be imposed in 20195.
Andy Briggs, Aviva UK and Ireland Life CEO, said:
“Auto-enrolment has undoubtedly had a positive impact on the pensions landscape in the UK. But we are just at the start of this journey. The current contribution levels will not have a significant impact on people’s financial position in retirement. Even when minimum contributions rise to a total of 8% in 2019, this still won’t provide an adequate retirement fund for millions of pension savers.
“Now that AE is embedded in over 250,000 businesses we need to build on the success we’ve had already and work out exactly how we’re going to crack this pension savings challenge.
“While AE is a positive development, there are still huge challenges. Average contribution rates in Defined Contribution pension schemes have consistently fallen since 20126 as employers and employees have adopted the minimum level of contribution as a default. The government, regulators, the pension industry and employers now need to work together to address this and give as many people as possible the best chance of a happy and prosperous retirement. That’s why Aviva launched its pre-review of auto-enrolment to help inform the Government’s own review next year.”
Since the introduction of AE more than 250,000 businesses have set up a workplace pension, allowing 6.6 million employees to be auto-enrolled. 93% of Aviva’s larger workplace pension clients7 and 70% of their SME clients agreed that they were supportive of AE.
Aviva has been carrying out an auto-enrolment pre-review ahead of the Government’s own review next year. The findings of the pre-review will be presented at an auto-enrolment summit at Aviva’s head office on London on Tuesday 15th November. Richard Harrington MP, Under Secretary of State for Pensions will be among the speakers. If you are interested in attending the summit please use the contact details below.
1Survey of 2000 UK adults currently paying into a workplace pension. Carried out by One Poll on behalf of Aviva (Sept 2016)
2Survey of 2000 UK adults currently paying into a workplace pension. Carried out by One Poll on behalf of Aviva (Sept 2016)
3Survey of 277 of Aviva/Friends Life larger corporate pension clients
4Survey of 277 of Aviva/Friends Life larger corporate pension clients
5Survey of 174 of Aviva’s SME clients
6PPI The Future Book: unravelling workplace pensions, second edition 2016
7Survey of 277 of Aviva/Friends Life larger corporate pension clients 8 Survey of 174 of Aviva’s SME clients
- Ends -
If you are a journalist and would like further information, please contact:
Ben Moss in the Aviva Press Office
Landline: 0117 928 5843
Mobile: 07827 832 395
Email: ben.moss@aviva.com
Notes to editors:
• Aviva provides life insurance, general insurance, health insurance and asset management to 33 million customers, across 16 markets worldwide
• In the UK we are the leading insurer serving one in every four households and have strong businesses in selected markets in Europe, Asia and Canada. Our shares are listed on the London Stock Exchange and we are a member of the FTSE100 index.
• Aviva’s asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages over £319 billion in assets.
• Aviva helps people save for the future and manage the risks of everyday life; we paid out £30.7 billion in benefits and claims in 2015.
• By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.
• The Aviva media centre at http://www.aviva.com/media/ includes company information, images, and a news release archive.
• For an introduction to what we do and how we do it, please click here http://www.aviva.com/about-us/aviva/
• For broadcast-standard video, please visit http://www.aviva.com/media/b-roll-library/
• Follow us on twitter: www.twitter.com/avivaplc/
• Follow us on LinkedIn: www.linkedin.com/company/aviva-plc
• For the latest corporate films from around our business, subscribe to our YouTube channel: www.youtube.com/user/aviva
• Aviva has a Globelynx system for broadcast interviews. Please contact the Press Officer noted above if you would like to make a booking.