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One in six (16.5%) employees will opt out when they are auto enrolled into a workplace pension scheme. More than double (48.4%) are unsure - and a third (35%) will not practice the option to take themselves out of the pension set up.

Older workers are the most likely to opt out after being automatically enrolled into a workplace pension scheme.　Inertia is more likely to keep part time workers in the scheme. 　And although some workers may be uncertain of whether or not they will opt out, they are likely however to be certain that they want to be able to choose the pension structure.

Over three quarters (78.7%) of those who initially opt out will opt out again three years later when they are automatically re-enrolled.

And although similar proportions of women and men claim they will opt out if automatically enrolled into a workplace pension scheme, a greater number of men will opt out again when they are enrolled back into the scheme three years later.


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Savings Inhibition

October 2011

[ View the full report ]

The study explores eight core identified drivers as to why people do not save enough and involves a deep level analysis to understand how these drivers impact the different segments of UK consumers. Many factors combine to influence consumer perception and action to saving, making it a challenge for Governments and financial services companies to efficiently and effectively encourage and induce behaviour. A range of drivers combine in countless ways to collectively drive behaviour and opinion. Essentially, the rationale behind one person’s decisions is unlikely to consist of the same combination of drivers that lead the next person to reach their own conclusions.

A qualifying round of analysis was conducted to identify the primary reasons that inhibit people when it comes to savings. As a result of this, eight key determinants were identified called collectively as the UNFUNDED Index©:

  • Understanding – This category covers the influence of matters such as consumer understanding of financial products and the financial services market.
  • Need This category covers the influence of matters such as consumer sense of whether people know how much they need to be saving and the future implications of not saving now, how much is needed in the future, life expectancy etc.
  • Fear – This category covers the influence of matters such as the degree to which fear impacts on savings behaviour – whether that be fear of poor returns, uncertainty in the market or of high levels of volatility etc.
  • Unable (Inability) – This category covers the influence of matters such as the degree to which individuals simply don’t have enough spare funds to allocate to saving.
  • Numbness – This category considers the notion of apathy and the level to which individuals bury their heads in the sand. Plus an assessment of whether making no decision is often easier than making a decision.
  • Distrust – This category covers the influence of matters such as consumer perceptions of the financial services industry, specifically the notion of trust – or the lack thereof – on savings behaviour.
  • Expectation of price – This category covers the influence of matters such as the effect that pricing, fees and charges have on consumer attitudes to save.
  • Decisions – This category covers the role of intertemporal choice on behaviour (the notion of consumers being inclined to spend and enjoy today rather than wait until some point in the future) and its effect on consumer utility.

The study deconstructs each of these eight key determinants and how they influence and impact consumer attitudes and affect long term savings levels.  A survey of respondents from United States, United Kingdom, Australia and China were asked questions regarding how they save and how they plan for the future. The findings are then further explored through gender, age and wealth differences among each of the countries involved in the study.

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