A recent Pensions and Lifetime Savings Association (PLSA) study has revealed that the majority of employees support its proposed pension reforms.
According to the PLSA, these reforms could help bolster retirement security and ensure savers enjoy adequate living standards in their later years.
Out of the 1,600 respondents, 80% backed the recommended reforms, with 53% expressing support for gradually raising automatic enrolment contributions from 8% to 12% over the next decade.
Additionally, 46% endorsed a shared contribution model where both employees and employers contribute equally, while 42% favoured employers taking on a larger contribution share.
The PLSA's 'five steps to better pensions' framework outlines the following proposals, which will affect both employees and employers:
- New objectives: The reforms seek to redefine the UK pension system's objectives, emphasising adequacy, affordability and fairness.
- State pension safeguard: Preservation of state pension value, including mechanisms like the triple lock pension to protect retirees from poverty.
- Workplace savings enhancement: Employers will play a crucial role in encouraging more individuals to save for retirement through workplace pensions. Contributions should increase from 8% to 12% over the next decade, with employers potentially contributing an additional 3%.
- Support for vulnerable groups: Extra support for under-pensioned groups including women, self-employed individuals and gig economy workers.
- Promoting engagement: Employers will be central in encouraging active employee involvement in pension plans, raising contributions and improving pension outcomes.
Commenting on the PLSA's findings, the Chartered Institute of Payroll Professionals said:
"It is always worth thinking about general perception and attitudes of employees when considering recruitment and retention.
"However, we also understand the burden that this can put on employers as well as the impact increased contributions can have on employees, especially during such hard financial times."
Talk to us about how these reforms could affect your organisation.
