Jessica BirdWhile the success of the automatic enrolment pensions scheme is evident, its reliance on apathy could cause unforeseen harm, according to Hargreaves Lansdown.
Clare Stinton, head of workplace savings analysis, speaking at the Watercooler Event today, said that automatic enrolment was helpful, but “it relies on people doing nothing, and ultimately leads to people sleepwalking into retirement.”
More people are saving into pensions as a result of the scheme, but only 39% of people were found to be on track for a moderately comfortable retirement, according to Hargreaves Lansdown’s research.
In addition, due to the cost-of-living crisis and other inflationary pressures, Stinton said: “Low income households are struggling to keep up with the moving goalpost [of retirement saving].”
With defined contribution (DC) pensions “putting employees in the driving seat,” Stinton said pensions is an area that needs demystifying.
She added: “Investment risk is hugely misunderstood, because you’re more likely to hear about losses, stock market crashes, than successes.
”People overestimate the risk of investing.”
Richard Turner, senior corporate distribution manager at Hargreaves Lansdown, added: “It is part of an employer’s responsibility to help people into a comfortable retirement.”
