The majority (82%) of employees auto-enrolled into a pension scheme would not opt out when information is presented clearly and effectively, according to research by Standard Life.
The Keep on nudging report found that, of those who would opt out when the 2012 pension reforms are implemented, a fifth said they would save in other ways, for example through property.
Almost a third (31%) of employees that plan to stay enrolled in a pension scheme are willing to contribute more than the basic 4% contribution rate.
Over 70% of respondents said they would not find it difficult to save an additional £50 a month if they had to, and 48% said it would be easy to do so.
The research also found that auto-enrolment could create an additional six million savers, adding £12.5 billion annually to retirement savings by 2017.
Possible extensions to the reforms could each see employees saving an extra £13 billion to £14 billion annually by 2025, doubling the impact of next year’s reforms.
The research highlighted two high-impact extensions that could build on the principles of the reforms and boost savings rates further:
• Auto-escalation of pension contributions, where an employee is enrolled at the 4% default rate and this contribution level increases by 0.5% automatically each time they have a pay rise. Only 4% of people who currently have some form of pension savings said they would opt-out.
• Auto-enrolment into workplace individual savings accounts (ISAs), where employees are auto-enrolled into both a workplace pension and a workplace ISA, investing 2% of pay. When this was tested, only a minor increase (3%) in opt-outs occurred.
David Nish, chief executive of Standard Life, said: “We believe that auto-enrolment can help re-introduce a savings culture in the UK and be an important first step in bridging the savings gap.
“The Keep on nudging report makes some practical recommendations which can help make auto-enrolment a resounding success. It may seem obvious, but carefully designed communication is essential in achieving results.
“By presenting information about auto-enrolment that is clear and effective, which provides a clear picture of the value of employer contributions and the tax advantages, our research found that 82% of people would remain enrolled in their pension scheme. This is a hugely encouraging finding.”
Read more articles on the 2012 pension reforms and auto-enrolment