Just one third of 18-24 year-olds are in a workplace pension, suggesting much more action is needed according to the Chartered Institute of Personnel and Development (CIPD).
Its Employee Outlook: Focus on employee attitudes to pay and pensions report found that while this young age group is least likely be in a workplace pension, two-thirds (66%) of working adults surveyed were saving into on, up from 45% recorded in 2010.
People in their mid-late thirties and early forties were most likely to be in a pension, with 77% of the 33 to 44 age group saving into a workplace scheme.
The research of 2,074 adults was conducted by YouGov between 10 December and 22 December 2015 and was selected and weighted to be representative of the UK workforce in relation to sector, size and industry type. It covered employees from across the private, public and voluntary sector, and both defined benefit (DB) and defined contribution (DC) schemes.
Of the third of all respondents that were not saving into a workplace pension (34%), 17% were in private pensions. This was mainly for individuals aged 55 or over, working for small or micro-employers, or earning over £49,000 annually.
Unsurprisingly, pension membership was associated with higher base pay with 44% of respondents earning between £10,001 and £13,600 a year not saving into a workplace scheme, compared to just 11% for those with a salary of more than £49,000.
When it came down to size of employer, 80% of employees working for a micro employer and 54% of those working for a small firm were not in a company scheme. On the other hand just 17% of employees working for a large organisation were not saving into a workplace pension.
Levels of pension awareness were lower among members of DB schemes, suggesting more communication from employers was required. Almost 70% knew what they were contributing and 56% knew what their employer paid in.
By contrast, 84% of DC members were aware of their pension contributions and 83% knew what their employer paid in.
The data also showed 28% did not know when they could retire, with the most unsure groups including women (32%), those employed in the private sector (31%) and those being paid less than £10,000 a year (44%).
Employers matching employees' pension contributions had a positive impact on workers with two thirds (66%) of respondents saying it encouraged them to save more than the minimum into a pension.
CIPD performance and reward adviser Charles Cotton (pictured) said although encouraging matching contributions would drive people to save more into pensions, he was concerned that potential tax relief reform could have a negative impact. The Chancellor is expected to announce a single rate of tax relief in his March Budget.
"Taxing pension contributions or introducing a single rate of tax relief would result in a significant administration and cost headache for many employers," Cotton said. "If changes have to be made then they should come in after 2018 as auto-enrolment will be complete and organisations will have had time to measure and respond to the impact of these other new initiatives.
"Employers are clearly taking a hit and this is likely to become more of a problem as the introduction of the National Living Wage in April and the Apprenticeship Levy in 2017 edge ever closer.
"For the moment it's better for employers to stabilise, rather than rush through changes that will put unnecessary strain on many organisations."
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