Effect on wages is making pension 'compulsion' less popular, says ABI

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The Independent Online

Public support for the introduction of rules which would force people to save for a pension is due largely to a misunderstanding of the financial impact such a move would have, according to research from the Association of British Insurers (ABI).

Public support for the introduction of rules which would force people to save for a pension is due largely to a misunderstanding of the financial impact such a move would have, according to research from the Association of British Insurers (ABI).

Several major polls over the last few years have indicated that 70 per cent of the British population support the idea of "compulsion" as a way to ensure that people save enough for their retirement.

Currently, the majority of people are saving nowhere near enough to provide an income which will allow them to retire at a reasonable age as well as maintain the standard of living to which they are accustomed. However, the ABI's latest report showed that further questioning of those who are not saving has revealed that support for the concept falls away when they are made aware of exactly what compulsion would mean for their monthly net earnings.

The ABI says that while 73 per cent of those surveyed supported some kind of compulsion, the majority wanted the onus to be on their employer, with only 26 per cent saying they were willing to accept a move to make them contribute more from their pay packet.

Additionally, the poll revealed that the majority of those who consistently support compulsion were those who were already making regular and sufficient pension contributions.

Joanne Segars, the head of pensions and savings at the ABI, said: "This research shows that the argument for compulsion in pension-saving is not black and white as it first appears. Once people start to understand the implications of compulsion and in particular realise that compulsion has to be paid for and is not simply free money, the arguments become less clear-cut.

"Even supporters of compulsion tend to shy away from the suggestion that they should contribute more than they do at present."

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