Employees have a poor understanding of workplace pensions, particularly around the available tax relief and employers’ contributions.
According to the National Association of Pension Funds (NAPF) Workplace Pensions Survey 2008, 29% of scheme members and 42% of non-members are unaware of the tax relief they could gain on their contributions. Just under a quarter (22%), meanwhile, are unaware of the contributions their employer makes to its occupational pension schemes.
Of the pension scheme members surveyed, 17% did not know how much their employer was paying into their pension pot each month. A further 34% of members felt their employers were not doing enough to explain the pension they offer. Among staff who had chosen not to participate in a pension scheme, 54% thought their employer could communicate the pension benefits better.
Nigel Peaple, director of policy at the NAPF, said: “The lack of understanding of tax relief and employer contributions presents an opportunity to boost retirement savings of the British workforce. Through regular and jargon-free communication, employers and the pensions sector have the opportunity to re-emphasise the benefits of workplace pensions. Addressing this knowledge gap could be a quick win.”