Standard Life has urged the Government to consider automatically increasing employee pension contributions each time they get a pay rise as part of a raft of proposals designed to boost auto-enrolment.
The insurer says a policy of “auto-escalation”, where employee contributions increase from the default minimum of 4 per cent by 0.5 per cent whenever their pay rises, would result in just 4 per cent of people who currently have some form of pension saving opting out.
Standard Life also reiterated its call to allow people to be auto-enrolled into workplace Isas, a policy the provider first put forward in its response to the Treasury’s call for evidence on early access to pensions.
The recommendations were made in a report titled ‘Keep on Nudging’.
The report, which is based on a survey of 600 employees earning between £18,000 and £45,000, suggests that 82 per cent of people will remain enrolled in their pension scheme if the value of saving is communicated in a “clear and effective” way.
Standard Life chief executive David Nish says: “The ‘Keep on Nudging’ report makes some practical recommendations which can help make auto-enrolment a resounding success. It may seem obvious, but carefully designed communication is essential in achieving results.
“By presenting information about auto-enrolment that is clear and effective, which provides a clear picture of the value of employer contributions and the tax advantages, our research found that 82 per cent of people would remain enrolled in their pension scheme. This is a hugely encouraging finding.”