The majority of employees on a workplace pension scheme think they should increase their pension contributions, according to a report by the Chartered Institute of Personnel and Development (CIPD).
The survey of more than 2,200 workers found that on average, members of defined contribution (DC) schemes want to put 9% of their annual salary into their pension pots. More than 4 in 10 think they should be contributing more than 10% of their salary.
However, the report also shows that average contributions are currently higher than the minimum:
- the average employer contribution to DC schemes is 6% – 5 percentage points higher than the 1% employer minimum
- the average employee contribution to DC schemes is 5% – 4 percentage points higher than the 1% employee minimum
- the average total contribution is 5% – 3 percentage points higher than the 2% minimum.
Additionally, the report highlights a lack of awareness among many workplace scheme members, with 22% admitting that they didn’t know how much of their salaries they needed to contribute.
Charles Cotton, reward adviser at the CIPD, said:
“Auto-enrolment has been successful in getting six in every ten eligible workers saving through a workplace scheme, but their ability to contribute adequately is being severely hampered by poor wage growth.
“Until the Government and businesses can tackle the root causes of the UK’s productivity challenges, we won’t see the wage growth needed to improve individual pension contributions and people may need to stay in work a lot longer to have a sufficient income.”