It is up to the industry to make auto-enrolment a success

So far, auto-enrolment has been a success, with around 90 per cent remaining enrolled. After several decades in the wilderness, workplace pensions are the norm again, which has been the Holy Grail for the industry for a long time. 

Many smaller businesses will lack the resources and expertise to support their staff when it comes to financial education. We in the industry need to take up the mantle

The challenge only begins now

But with minimum contributions currently standing at 2 per cent overall, many will still not be saving anything like enough for a comfortable retirement, so in many ways the challenge for the industry begins now.

This will be the first toe in the water for many employers as far as pensions are concerned, and the first time many of their employees will have engaged with as important a financial product as a pension. 

Furthermore, as minimum contributions from employees begin to rise from 2018, the number of individuals choosing to opt out could follow suit. The continued success of auto-enrolment depends on clear lines of communication on the benefits of paying into a pension, particularly when workers face other, short-term pressures on their income. Strong and effective financial education for all is also a must. 

Industry must support employers in giving guidance

While the days of the paternalistic employer might be gone, staff will still look first to their employers for guidance. These companies have a responsibility to ensure they are acting in their employees’ best interests.

However, many cash-strapped smaller businesses will lack the resources and the expertise to support their staff when it comes to financial education.

Therefore, we in the industry need to take up the mantle. Levels of financial literacy in the UK are worryingly low, with 60 per cent of people saying they need help managing their finances and 96 per cent of UK teens worrying about money on a daily basis according to CSR agency The Giving Department.

Confusion and lack of knowledge are also regularly cited as reasons for putting off saving. It would therefore be irresponsible of us to unleash a new product on the UK population without offering them the adequate support and information to allow them to embrace it.

Opportunity to rebuild trust in the financial sector

Instead of viewing this responsibility as a burden, we should regard it as an opportunity to improve financial literacy and rebuild trust in the financial services sector.

For the first time in decades, we have a captive audience of pension savers. We could do what we have always done and hope some of it sticks. Or we can take up the challenge and recognise that the workforce of today will want to engage in a different way.

We could simply direct employers to the Pensions Regulator website, which houses some useful information for employers, or we can start to develop communications fit for a world where Siri and Alexa battle it out to capture the imagination of a new breed of savers. 

We need to build plans for the next 10 years, not just plans to get us over the line or tick a compliance box. On the whole, the population lacks both the confidence and knowledge necessary for financial security. 2017 must be the year we really start to address this.

Rob Gardner is co-founder of consultancy Redington