Tens of thousands of West Midlanders are not saving enough for retirement – with average savings less than £20,000 – while many firms have their heads in the sand over auto-enrolment.
Companies across the region will face a ‘last-minute scramble’ to comply with legislation requiring them to sign up for the new auto-enrolment regime, according to Bromsgrove-based financial advisers Johnson Fleming.
But, with the average pension pot just £17,700 – giving an annual income of only £1,030 – many savers throughout the region could be facing a poverty-stricken old age.
Research by Scottish Widows showed that only 40 per cent of West Midlanders were saving adequately, with 23 per cent not saving at all, 12 per cent ‘seriously under’ saving enough and 24 per cent ‘somewhat under.’
Simon Dodd, marketing manager at Johnson Fleming, said: “The experience we have had through the larger organisations is that it is much worse than you might think. It is not just the effect of pensions, it is about changing payrolls, administrative procedures, IT etc.
“Some of the larger organisations have struggled to cope and the larger companies have pension teams and HR departments. This is going to be a huge burden for some smaller companies.”
Research by the Pensions Regulator shows only 18 per cent of micro-employers (firms with one to four employees) offer a pension, while 38 per cent of small employers (five to 49) offer one and 71 per cent of medium employers (with 50 to 89 employees). Only 67 per cent of medium employers understood auto-enrolment, reducing to 35 per cent in micro-employers.
Less than a third of medium employers knew which of their workers would be affected by auto-enrolment, and only 37 per cent knew what needed to be assessed to determine eligibility.