Standard Life recently commissioned some research into whether or not employees would be happy with being made to make pension contributions. 3,000 people were surveyed and 61% said they believed compulsory employee pension contributions were a good idea. In addition, over 75% said they would like to see their employer making contributions on their behalf.
The general view was that both employees and employers should pay contributions of between 5% and 8% of salary.
Our View
Many people have long been of the opinion that compulsory pension contributions would be seen as yet another tax. However, the results of this survey show that people are actually sitting up and realising that they need to save and make provision for their own retirement.
For those that can afford to pay into pensions, they should take advice on the most appropriate and cost effective route for them. However, for those lower paid employees that cannot afford to contribute, they should not be made to. If they were forced, they could be worse off in retirement, given the State benefits they may be entitled to.
We have found that even where employers pay into pensions for employees, some do not bother joining the pension scheme, missing out on contributions of 3% of salary and more. This really is throwing money away!