Nearly a quarter (23%) of young adults aged 18-24 years old have never heard of pension auto-enrolment (AE), despite upcoming proposals to extend AE to 18 year-olds, research from Standard Life has revealed.

The survey found that one in 10 savers (10%) are only vaguely familiar, while one fifth (20%) said that they know a lot about auto enrolment.

Standard Life suggested that pension savings are unlikely to be the first financial priority for those entering the workforce for the first time, with its research showing that inflation (54%), interest rates (52%) and energy prices (49%) were bigger worries.

There was some support for auto-enrolment amongst younger savers though, as the survey found that 42% of the 18-24 group who were familiar with AE believed it be an important stimulant in encouraging people to save.

However, Standard Life stressed that whilst inertia has played a key role in the success of AE, member engagement is becoming increasingly important, particularly in light of new pot for life proposals announced at the Autumn Statement.

Commenting on the findings, Standard Life managing director for workplace pensions, Gail Izat, said: “Over a decade on, auto-enrolment has clearly had huge benefits for the UK’s pension savers, helping to fill the gap created by the demise of defined benefit schemes and establishing retirement saving as the norm in workplaces across the country.

“One of the biggest successes of auto-enrolment has been the low level of opt-outs, partly due to the rise of saving by inertia.

“As people move through their careers, however, the importance of taking an active role in retirement planning increases and lack of engagement can mean people often don’t have the chance to review how much they are saving, review this in the context of what it might mean for their future retirement and adjust their contributions accordingly to meet their retirement goals.

“In the Autumn Statement the government announced a consultation into legislating for a pot for life, which would give people the option of choosing a pension that would follow them from job to job.

“These figures highlight potential challenges with getting people to engage with their savings given low levels of knowledge and the need for careful thought around how we take the system from one based on inertia, to one that would require more active choice from savers.

“There are significant steps currently being taken to increase the amount people are saving into their auto-enrolled pension scheme, including a new law to lower the minimum age to 18 and remove the ‘lower earnings trigger’ of £6,240.

“However, the single biggest thing that people can do to boost their chances of securing a decent fund for their retirement is raise their contributions as soon as they can to benefit from investment over a longer period.”

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