The workplace pensions survey by the National Association of Pension Funds has revealed that over one in four of all employees with access to a workplace pension are unaware of pension tax relief and one in five are unaware of how much their employer contributes or would contribute if they were a scheme member.
The findings showed that more work must be done with employees to build their understanding of the benefits of workplace pensions.
The National Association of Pension Funds (NAPF) believes that simple and regular information on the benefits has the potential to boost retirement savings amongst the British workforce, especially for those who have not joined their employer’s pension scheme.
An estimated five million employees with access to a workplace pension scheme are not aware they receive, or would receive, tax relief on their pension contributions.
One in four employees who were members of a workplace pension stated they were not aware that they received tax relief, rising to two in five for those who are not members. Men were more likely to be aware of the tax benefits of pension saving than women. Overall, the figure was 29%.
An estimated 3.8 million employees with access to a workplace pension scheme said they did not know how much their employers contributed, or would contribute, to the workplace pension scheme.
One in six employees who were members of their pension scheme were not aware how much their employer contributed to their pension. This more than doubled for those who could join a scheme where they work but had opted not to. Overall, the figure was 22%.
Overall, an estimated 6.8 million with access to a workplace pension scheme felt that their employers did not do enough to explain the pension they offer to employees.
The survey found that one in three scheme members felt that their employers were not doing enough to explain the pension they offer. This increased to 56% for those who had the opportunity to join the scheme but had not opted to. Overall, the figure was 40%.
Nigel Peaple, director of NAPF, said: The lack of understanding of tax relief and employer contributions presents an opportunity to boost retirement savings of the British workforce.
Through regular and jargon-free communication, employers and the pensions sector have the opportunity to re-emphasize the benefits of workplace pensions. Addressing this knowledge gap could be a quick win. The workplace, through initiatives such as Pensionforce, is one of many ways forward.