Pension opt-out numbers set to rise

UP TO a third of the employees set to be automatically enrolled into workplace pensions from next year are likely to opt out, a report published today warns.

A lack of trust in the government and the effects of the economic downturn mean some three million of the workers being shifted into pensions under landmark reforms could walk away, according to research by the National Association of Pension Funds (NAPF).

Workers aged between 22 and 65 and earning more than £7,475 a year will be automatically enrolled into their employer’s pension scheme or, if there isn’t one, into the National Employment Savings Trust, under reforms being phased in from October 2012.

The government hopes the reforms will create up to nine million new savers, but the research found that up to a third will opt out, up from the one-in-four leavers predicted in 2007.

Almost half intending to drop out said they couldn’t afford the contributions, while 29 per cent claimed they didn’t trust the government and a quarter didn’t trust the pensions industry. Joanne Segars, chief executive of the NAPF, said: “People are wary of pensions and that’s a big threat to auto-enrolment.

“We’re alarmed that so many say they’ll reject the new deal, and the picture has got worse since the recession.”

Speaking at the NAPF annual conference yesterday, Segars called on the pensions industry to be more transparent. “People need information about their pens