Millennials have embraced the new automatic enrolment in a workplace pension, according to research by Royal London. A survey found that 71% of Millennials decided not to opt out of the plan. A further 8% initially opted out but then returned to their workplace plan.
The news may ease fears that younger people do not see pension saving as important. Three quarters of Millennials said they would increase their pension payments automatically in line with a pay rise, while 40% plan to increase pension payments next year.
However, almost one third (28%) of Millennials do not know how much is being paid into their pension pot. More than half (57%) say they know they should be saving more towards retirement.
The ratio of contributions made by employees and employers also impacted on Millennials’ willingness to save. Around three quarters (74%) said they would continue to contribute 2% if their employer gave 3%; but if contributions rose to 8% with employees paying 5% and employers paying 3%, that figure dropped to two thirds (62%).
However, if employees and employers both gave 4% then 76% of Millennials would be willing to save on those terms.
Jamie Clark, Pensions Business Development Manager at Royal London said: “Providers, employers and financial advisers all have a duty to ensure employees are engaged in their future pension planning as soon as possible and fully understand the consequences of opting out of their workplace pension.”
The government is in the process of reviewing the automatic enrolment programme, in a bid to increase the number of people saving into a workplace pension. Royal London has recommended that contributions should be more than 8% of salary.