One in eight workers are thinking about leaving their workplace pension schemes when contributions rise next April, according to research by Aviva.
The insurance giant said that while only 4pc of people have definitely decided to opt out of their pension schemes next April, with half of people still planning to save into one, everyone else is on the fence.
Automatic enrolment began in 2012, with current rules requiring 2pc of an employee’s salary be paid into their pension. Next April that will rise to 5pc, of which workers pay 3pc; in 2019 it will increase to 8pc.
There are concerns that the increases could lead to more people opting out of saving into their pension, with insurance giant Aviva noting that over a third of workers are yet to decide what to do.
In its study of 2,007 private sector workers, the insurer found that one in eight people were considering leaving their workplace pension schemes.
Aviva has already called for minimum contributions to rise to 12.5pc by 2028, with its workplace managing director Colin Williams saying the 5pc increase due next year is “well short of the level we believe is necessary”.
“By staying opted in, savers will benefit from their employer putting more into their pension,” he said. “The result will be that they are giving their future self a pay rise.”
Automatic enrolment was first muted around a decade ago amid fears UK workers were not saving enough for retirement.
Since its introduction more than 8.5m employees have signed up for a workplace pension. Participation had been falling in the previous years and hit a low of 55pc in 2012. By last year that had risen to 74pc after a particularly sharp upswing among workers in their 20s.
According to the Department for Work & Pensions, workers saved £87.1bn in workplace pensions in 2016, over £10bn more than in 2012.
When it was launched, pensions minister Steve Webb described automatic enrolment as a “radical social change”. He said: “All the international evidence shows people respond positively to automatic enrolment, and I’m determined to make sure pensions are no longer seen as the preserve of the few.” But the measure faced opposition from small businesses, some of whom have struggled to deal with the extra red tape.
According to the Association of Consulting Actuaries, as many as 12m employees, a mixture of the self-employed and some ineligible workers at small firms, are currently excluded from the scheme.
In October, pensions firm Aegon revealed research suggesting a worker on the average wage of £26,500 would have so far built up a pension pot worth just £2,440, though that’s partly because the initial minimum contribution was a slender 1pc of wages.