As the pensions auto-enrolment scheme continues to move forward, a pensions specialist has warned employers to be more realistic about the contributions members should make to achieve their wished-for retirement fund.

All UK employers, including Umbrella Companies, are required to participate in the scheme, with many facing staging dates over the coming three months; however, according to Marian Elliott, director of the pensions specialist Spence & Partners, some employers are not alerting members to the fact that they will need to make more than minimum contributions.

Likening auto-enrolment to the ‘five-a-day’ fruit and vegetable campaign, which deliberately cut the real nutrition requirement of nine a day because the government felt people would not engage with such a change, Ms Elliott said: “If the industry places too much emphasis on the minimum figures as good retirement provision then members are less likely to consider contributing further to actually reach their pension goal.”

If people believe that the minimum contribution of 3% will be sufficient for this goal, they are likely to be disappointed. More realistically, the figure needs to be around 15 to 20%, made up of a combination of employer and employee contributions, if the desired standard of living is to be covered upon retirement, she added.

Ms Elliott continued: “Improved communication is going to be vital to the long-term success of auto-enrolment and employers have a duty to invest in good member communications, with visuals and messages that speak directly to them in a way people can relate to. Only then might we have a population who is properly engaged with their pension and saving a reasonable amount.”

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