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Don’t let young employees ‘opt out’ of the pensions conversation

New research has revealed that the highest percentage of opt-out rates in auto-enrolment is made up of 22- to 30-year-olds (28.49 per cent of 2,102 people surveyed, who chose to opt out of schemes, were in this age bracket).

Of course, it’s easy to downplay this statistic and argue that a high opt-out rate among this demographic is to be expected, given that, to use an old cliché, ‘they have got their whole lives ahead of them’, but should it be cause for concern?

From the very first announcement of the auto-enrolment programme, the government has prioritised efforts to communicate the positive message that ‘planning for your pension from a young age is vital’.

Auto-enrolment has, of course, been introduced to try and reduce the ever-growing strain on the state pension pot caused by the increasing number of people living longer, but do these figures highlight that the message is not getting through to enough of the younger generation?

At this stage, it’s important to remember that employers are legally unable to advise, instruct, communicate or influence in any way information about opting out of auto-enrolment pension schemes. Taking this into account, are young people in fact simply dismissing the opportunity to enter schemes?

While it is the right of any individual to opt out of the scheme at their discretion, these figures do beg the question: are we doing enough to inform and engage young people in the auto-enrolment process?

Alas, this trend isn’t limited to the youth. Recent newspaper reports have revealed that a large percentage of the older population have little faith in pensions and around half are confused about the new rules regarding radical reforms to retirement options and annuities.

With many people uncertain they’ll have enough to live comfortably in retirement, it’s clear that demystifying the raft of regulations and jargon and implementing a tailored approach to engagement with all demographics needs to be a priority.

Undoubtedly, employee outcomes have an increased chance of success when staff engage in key issues and recognise how the decisions they make now will have a direct impact upon their futures.

As outlined in our ‘Employee communication and engagement’ brochure, absolutely critical to successfully achieving engagement is effective employee segmentation. Supplementing segmentation with capabilities such as our ‘Nudge’ functionality, which uses key trigger points in an employee’s life cycle, businesses can deliver individually tailored, time-specific personal communications.

Engaging with young members new to pension schemes will require a different approach to those who have built up a sizeable pot and are looking at investments, who will equally be different to those approaching retirement.

As the trend of each generation living longer continues, today’s young people will have to take more responsibility for saving for their retirement.

If we are to reduce the opt-out statistics of the 22- to 30-year-old demographic, there needs to be an enhanced effort to change their perceptions to ensure they don’t feel as though they are having money confiscated from their pay packets. Hard-pressed young people are more reluctant than their elders to pay into pensions as they want to enjoy the wage that they earn.

It is therefore absolutely critical for employers to plan ahead now in order to tailor, target and time the relevant ‘myth-busting’ communications for young people and ensure that they are aware of how auto-enrolment will help them get the retirement income they would like.

For more information, please visit or call 01527 571 300.



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