Kim Kaveh asks if the benefits of matching contributions are being communicated sufficiently.
Analysis by Royal London has found over three million people working for larger employers are failing to take up around £2bn a year which their employers have offered as matching contributions to their workplace pension schemes.
Royal London director of policy Steve Webb explains: "Millions of workers are missing out on 'buy-one, get-one-free' money from their employer in the form of ‘matching' pension contributions."
He adds: "Much more needs to be done to make workers aware of the money their employer will add to their pension if they are willing to contribute at a slightly higher level."
At the same time, a poll by You Gov showed some 27% of 18 to 34-year olds do not understand enough about pensions.
The same YouGov report found 32% of respondents above the age of 18 prioritise saving for travel and 29% prioritise rainy day saving - compared to just 21% who prioritise putting savings in to their pension.
Engaging and educating
It is clear that, for many, retirement does not pose as much concern as industry experts say is necessary.
Quantum Advisory partner and actuary Stuart Price is convinced employees are not educated about the benefits of matching contributions and how little it can actually cost them to save.
Price says: "There is lack of understanding about how people can get the most out of their scheme to ensure they can retire at a reasonable age and have a decent level of income."
He claims workers could be losing out on hundreds of pounds a year by only saving the minimum to their pension pot - suggesting workers could accumulate hundreds of pounds more every year from their employer and tax relief towards retirement.
Price comments: "A big problem is that many individuals do not realise that saving for a pension is much less costly than they think."
Barnett Waddingham senior consultant Malcolm Mclean argues it is in both the interests of the employer and employee for workers to protect themselves in later life - noting there are many benefits of having a fully pensioned workforce.
He says: "It is essential that the benefits are clear to members, in order for the advantages of supporting their employees is used to the maximum extent possible."
But, as Lane Clark and Peacock partner Bob Scott explains, many trustees are concerned about giving, or being perceived as giving, financial advice and are reluctant to provide members with certain information due to fears of crossing that line.
Since the government introduced auto-enrolment (AE) in 2012, nearly eight million people have been enrolled on to a pension scheme, with many more to follow.
Many in the industry believe AE provides a significant opportunity to encourage people to save more into pensions and take advantage of employer contributions.
Hymans Robertson head of DC consulting Lee Hollingworth explains: "The challenge now is to stop the success of AE from becoming a missed opportunity. We need to encourage meaningful saving rates and for employees to take advantage of available matching contributions."
Barnett Waddingham's McLean argues once we have got through the project stage of AE in 2019, setting up engagement programmes is essential.
And he adds that, as well as matching contributions, the government also needs to look at minimum contributions and is disappointed that this isn't being looked at as part of the AE review.
He says: "There's nothing to stop them looking at it now so they can bring it in in 2019. If they review it then, it is going to be 2022 before they bring in legislation for it."
More than half of BlackRock’s flagship UK defined contribution (DC) default fund’s assets will be invested in ESG strategies by June 2021.
Graeme Bold says the right communications can improve both the level of savings and the outcomes for savers.
More than half of UK savers agree they are unable to save sufficiently to achieve the retirement they want, according to research by BlackRock.
Pension savers have held off from making changes to their pensions despite nearly half having been impacted by the pandemic, research finds.