Eleven years after auto enrolment was introduced to the UK, employee benefits software provider Zest polled 1,003 UK adults, all currently employed, to find out how well they understood the rules around auto enrolment, and the tax and National Insurance benefits of paying into their workplace pension.
Of the more than 1,000 people surveyed across the UK, only 2.3% of people were able to correctly answer what their minimum pension contribution is, with the median response being 18%, when in fact the correct answer is less than half that amount (8%).
Similarly, only 4.9% of all respondents were correctly able to answer three questions about who makes pension contributions, what the tax relief is on employee pension contributions and how a bonus that’s paid into a workplace pension would be treated for tax and National Insurance. However, those people who were able to answer all three of these questions correctly were 65% more likely to say they’d pay a bonus into their pension than those people who answered one or more of those questions incorrectly (10.2% vs 6.18%).
This lack of understanding of the tax and National Insurance benefits of paying money into an employee pension is potentially costing the British public over £112m each year in missed tax and National Insurance savings.
One of the findings from our survey was that whether their employer uses an employee benefits system to manage their workplace benefits appears to significantly influence people’s likelihood of paying a bonus into their workplace pension.