'More British workers keen to save'
The tough economy has triggered a new mood of financial "stoicism" among Britons and raised the chances of the Government's landmark scheme to place millions of people into workplace pensions being a success, a report has found.
A fundamental shift in the way consumers handle their finances has taken place , which has helped to make workers much more receptive to reforms which will automatically place them into pension schemes over the next five years, according to pension provider Nest and researchers the Futures Company.
The report was published as the first anniversary of auto-enrolment approaches. Over 1.6 million people have been placed in workplace pensions since the roll out of the scheme started last October with larger firms which tend to have more experience of pensions.
Three-fifths (61%) of people surveyed for the report who are yet to be placed in a workplace pension plan to stay in it, showing a sharp increase from less than half (47%), when similar research was carried out in 2011. Just under one fifth (18%) of consumers disagree with the idea of auto-enrolment, marking a downward shift from 27% in 2011.
So far, the rate of people staying in schemes once they have been opted in has been higher than many pundits had expected, with around nine in 10 people who are being auto-enrolled remaining in their pensions.
In trying to explain the "surprisingly low" opt-out rates, the report pointed to "growing evidence that the recession has changed consumer attitudes towards money".
It said: "A more stoic mindset appears to have taken root."
More than half (57%) of people questioned said they will never spend money as freely as they did before the financial crisis, marking an increase from 48% a year ago and 43% in 2010.
Despite some more optimistic news about the economy in recent months, the report found that people are still keeping a tight control on their purse strings, with just 29% of people saying they do not pay off their credit card balance each month, down from 52% in 2011.
Three fifths (61%) of consumers said they think twice before making even a small purchase, up from 48% in 2009 and 45% of 25 to 34-year-olds regularly use their mobile phone to compare prices.
Of the workers questioned who have now been placed in a workplace pension, around half (51%) of those who had remained in said they felt it was time to start saving for retirement while a similar proportion (48%) agreed it made financial sense because the employer also contributes. However, around one in seven (13%) also said they had remained in their pension because they had been "too busy" to opt out.
The report said: "It's this trend towards a sense of financial responsibility for the future that appears to provide more fertile ground for automatic enrolment than was expected.
"There is a definite intent in people's minds to save more and spend less... Automatic enrolment gives people a straightforward way to convert their best intentions into action."
The drive to get more people saving for their future aims to head off a looming retirement saving crisis, amid fears that people are living for longer but not putting enough aside for their later years.
Up to nine million workers are expecting to be newly saving into a pension or saving more as the reforms roll out.
Office for National Statistics (ONS) figures showed last week that the number of private sector workers saving into a company pension fell to an all-time low since records began in 1953 of 2.7 million last year, just before automatic enrolment started. The peak for private sector pension saving was in 1967, when 8.1 million people were saving into a pension.
Consumer campaigners have also urged a tougher crackdown on schemes with rip-off charges to boost confidence in pension saving generally.
An Office of Fair Trading report published earlier this month warned that up to £40 billion of pension savings could already be in schemes which are delivering poor value or are at risk of doing so.
The Nest/Futures Company research said the increased appetite for pension saving "places an even greater responsibility on the pensions industry as a whole to be open and transparent with savers".
Minister for Pensions Steve Webb said the last year has "heralded the biggest change to pensions in a century".
He said: "E arly research of the country's 50 biggest employers showed on average just 9% have chosen to opt out.
"Automatic enrolment will mean that pensions are no longer the preserve of the few and will see six to nine million people saving more or for the first time by 2018."
Charles Counsell, executive director automatic enrolment at the Pensions Regulator, which works to promote understanding of workplace pensions and prevent problems, said auto-enrolment has got off to an "excellent start".
He said: "Automatic enrolment has been successfully rolled out to more than 2,000 of the UK's largest employers and well over 1.5 million people are now saving for their retirement as a direct result."
Around 2,000 people took part in the latest Nest/Futures Company research, of which the vast majority have yet to go through auto-enrolment.