The latest research published by the Chartered Institute of Personnel and Development (CIPD) shows more than half of UK employees are unaware of the sweeping changes in pension norms coming into play next year.
The survey – Employee Outlook: Focus on Pay and Pensions, published today, found 53 per cent of workers in the country have no idea of the pension reforms and the auto-enrolment due to be rolled out in October 2012.
The survey also found the lack of awareness is highest among young workers in the private sector.
Auto-enrolment will have the highest impact on the voluntary and the private sector, the survey found with 42 per cent and 46 per cent stating awareness.
The research shows 57 per cent of respondents in the finance industry, 54 per cent in the construction industry and 50 per cent in professional services are aware of auto-enrolment reforms in the private sector.
However, only 31 per cent of employees in the 18 to 24 age group in the voluntary and private sector are aware of the auto-enrolment changes. In the 25 to 34 age group, the awareness proportion is higher at 40 per cent.
Employees in the 45 and 54 age group have higher awareness (45 per cent) while those over 55 years have the highest knowledge (57 per cent) among all age groups.
The research suggests that both the government and employers need to take initiative to communicate pension reforms to employees, said Charles Cotton, CIPD adviser for performance and reward.
“From our survey we can see the greatest challenge to communicating the reforms is among the young. A more targeted effort in communicating the changes to this group is needed to ensure they understand how the reforms will directly benefit them,” said Mr. Cotton.
“The danger is that a cheap and cheerful one size-fits-all communication approach could end up costing the government more in the long-term through a lower understanding and appreciation of retirement savings,” he added.
The non-means tested flat pension should help all employees, particularly as the withdrawal of default retirement age starts to take effect, CIPD observed.
“Workers, employers and the government all have an important part to play in the future of pensions,” the report observed.