More people leaving workplace pension schemes, TUC warns
Growing numbers of workers are cutting their workplace pension contributions or opting out of schemes entirely because they cannot afford payments – prompting calls for employers to increase the amounts they pay in.
With real wages falling and bills rising sharply, people across the country are looking for ways to reduce spending and supplement their incomes, and the TUC said it was hearing about staff in both the public and private sectors who had concluded they could not afford to save for retirement at the moment.
“Based on what our unions are telling us, anecdotally they are saying quite a lot of people are having to leave schemes,” a spokesperson for the trade union said. “That is public sector and private sector … It’s something we’re hearing quite a lot from the public sector unions.”
Its warnings follow data released in August indicating that the number of people choosing to opt out of their company pension scheme increased by almost a third between March and July this year.
The figures were issued by Penfold, a digital pensions platform used by private savers, the self-employed, company directors and businesses.
About 10% of people quit their workplace scheme, and the TUC said Penfold’s findings – which would translate into a two to three percentage-point increase in opt-out rates, lifting them to about 12%-13% – appeared broadly consistent with what it was hearing.
The reports have already led to calls for the government and the pensions industry to work together to come up with a solution to avoid people being left short at retirement.
Investment advisers say workers thinking of quitting their scheme need to think very carefully before jumping ship. Someone who opts out is essentially giving up the pension
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