Pension contributions 'encourages savings'
27-01-2012 10:57
The implementation of the auto-enrolment initiative for workplace saving schemes may lead to more people seeking pension transfer advice in order to maximise their income for later life.
This is because a new consumer survey from the Association of British Insurers (ABI) has found this scheme could be set to encourage more people to take action regarding their retirement preparations.
Almost half (47 per cent) of the respondents said they will not be opting out of the scheme as a result of the benefits of employer contributions.
An additional 14 per cent said the tax relief on contributions is another positive characteristic of auto-enrolment.
It was suggested this is demonstrative of the value people place on their money being made more effective through savings and additional support.
Those who want to take further action may wish to consider their pension transfer options in order to seek additional investment opportunities.
A similar scheme that has been launched in New Zealand is said to have made a significant contribution to a doubling in the number of national pension savers.
Greater success is expected in the UK's scheme, as it covers all eligible workers, whereas New Zealand's is restricted to those who are starting a new job or changing positions.
"Around half of workers are either not saving into a pension or not saving enough, so auto-enrolment will give many people the much needed nudge to save for their retirement and break the savings stalemate," commented acting director of life, savings and protection at ABI Maggie Craig.
"Current financial pressures can mean building up a sufficient pension pot often gets put on the backburner," the expert claimed, encouraging people not to miss out on this opportunity.
Head of corporate benefits marketing for Friends Life Martin Palmer recently said the new system is a huge change, suggesting increased financial education is necessary to ensure individuals fully understand the matter.
Ashall Glover Financial Services, pension transfer specialists
Posted by Sarah Williams
