Britons are losing confidence in the ability of pensions to provide for living costs in old age, casting doubt on the likely success of government initiatives to get more people saving into a pension pot, a survey has found.
A total 70 percent of employees in the UK do not believe that their pension will give them enough money to live on in retirement, a poll conducted by Populus for the National Association of Pension Funds (NAPF) showed.
As a means of saving for old age, just over half of the 2,050 respondents expressed a lack of confidence in pensions compared with 37 percent who remained optimistic about their prospects, the lowest since records began in 2007.
We have to bolster faith in pensions if our society is to pay for its old age, Joanne Segars, NAPF Chief Executive, said.
The government is due to phase in auto-enrolment this year, under which employers will sign staff up to their corporate pension schemes unless they ask to be excluded. It could see up to nine million additional workers signed up for pension provision.
Auto-enrolment could be a huge step forward, but we are going backwards when it comes to confidence in the product, Segars said.
Less than half of employees in Britain (48 percent) are currently saving into a workplace pension scheme, the lowest proportion since records began in 1997, official figures from the Office for National Statistics (ONS) showed last month.
The NAPF said growing doubts about the value of saving into a pension could see more employees opting out of the scheme.
Out of those eligible for auto-enrolment, a third intend to quit the scheme, citing distrust for the pensions industry as well as inability to afford the obligations, the survey showed.
Quitting a workplace pension can mean losing tax breaks and employer contributions which are, in effect, 'free money', said Segar. The benefits of auto-enrolment need to be more widely understood.
The NAPF represents 1,200 pension schemes in the UK, with 15 million members and assets of around 800 billion pounds.
(Reporting By Anjuli Davies; Editing by Elaine Hardcastle)