“Informed inertia” is required to ensure that members remain auto-enrolled up to and following the planned contribution rises this year and in 2019, Now Pensions director of policy Adrian Boulding has said.
Ahead of the upcoming auto-enrolment pension contribution increases in April this year, Now Pensions has suggested that pension providers, employers and the government should work together to drive home the benefits of pension saving and encourage members to do nothing.
While the success of auto-enrolment has been somewhat accredited to members’ inertia, the pensions provider told Pensions Age that with increased rates set to be taken out of employees’ pay for their pension contributions, they should be informed and ensured of the benefits of remaining opted-in.
Although employers are not required to provide communications to employees regarding the planned increases, Now Pensions is working on providing its employers with information kits to share with members.
The pension kits can work to reinforce the need and importance of saving for retirement and highlight that it is “not just you paying more”, but employer contributions are to rise also. It is from this knowledge, therefore, that members could be persuaded to remain opted-in and essentially “do nothing” to alter their pension arrangements.
Contribution rates are set to increase to 5 per cent in April 2018 and 8 per cent in April 2019.
Looking at a more active approach to informing members, Boulding voiced his support of the pensions dashboard project. Boulding echoed a similar view to many supporters that “once we’ve got it, we’ll wonder how we ever managed without it”.
He explained that the provider is “delighted” that the Pensions Minister has agreed that compulsion should be necessary and noted that multiple points of access to a dashboard are necessary and should be made accessible “seamlessly” from providers.
While provision of information to the dashboard will firstly be voluntary, Boulding said he expects compulsory provision to be called for by 2020/21.
Subscribe to our newsletter to receive breaking news by email.