1 in 20 workers quit big company pensions

One in four large employers (26%) have reported a rise in the number of employees actively opting out of their pension scheme, according to new research. The soaring cost of living and a need to cut back on savings for some are driving the trend. Research carried out by workplace pension and savings provider Cushon found that over half (52%) of people in the UK have cut back on non-essential spending and almost a third (29%) have stopped saving money due to rising living costs. Cushon has urged employers to offer pensions education in the workplace to help tackle the trend. Large employers are defined by Cushon as those with more than 500 employees and so far 1 in 20 members in these schemes have pulled out, Cushon research shows. The research revealed that over half of people (52%) have been forced to cut back on their non-essential spending due to rising costs. Cushon says that while the number of people opting out remains relatively low so far at 5% there is concern that this emerging trend could hit many more retirement plans. Cushon says that salary sacrifice could be one way for employees to save money and continue pension contributions. Over six in ten (61%) people say they want their employer to offer salary sacrifice, according to the study. Raising employer contribution levels would also increase support for employees and encourage them to continue saving into their pension, says Cushon. These steps could also help ensure that the number of people opting-out of pensions does not increase further. Steve Watson, director of policy and research at Cushon, said: “Understandably, the cost of living crisis is forcing people to cut back on spending wherever they can and although pension opt-out rates remain relatively low, they are at risk of spiking the longer the crisis goes on as it becomes more likely that employees consider opting-out and putting their future financial health in jeopardy. “When finances are stretched, people look to reduce costs on the things they believe aren’t offering value for money. Unfortunately, for too many people, pensions fall into this category and this is down to a lack of understanding and engagement with employees. “Employers need to do more to ensure that not only are they educating employees about the advantages of their pension but also encouraging them to keep saving by raising the employer contribution – without steps such as this, the numbers of people opting-out of pensions could increase.” Cushon has more than 500,000 customers and has £1.8 billion of assets under management. Corporate clients include 250 blue-chip companies. • Employer research was conducted by Censuswide of 501 HR managers in companies with 500+ employees in February. Employee research was conducted by Censuswide of 2,006 employers (weighted to be nationally representative) also in February.

1 in 20 workers quit big company pensions

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