insight
Evidence type: Insight i
Qualitative research is more exploratory, and uses a range of methods like interviews, focus groups and observation to gain a deeper understanding about specific issues - such as people’s experiences, behaviours and attitudes.
Quantitative research uses statistical or numerical analysis of survey data to answer questions about how much, how many, how often or to what extent particular characteristics are seen in a population. It is often used to look at changes over time and can identify relationships between characteristics like people’s attitudes and behaviours.
The UK introduced workplace pensions scheme auto enrolment in October 2012, requiring employees and employers to make mandatory minimum contributions each pay period into a pension based on the employee’s eligible earnings. Nest, the National Employment Savings Trust, was created so that every employer in the UK, large or small, would have access to a workplace pension scheme that could be used to fulfil their new duties under auto enrolment. As such, this report is important in that it provides insight into the progress of the scheme and its members’ experiences.
The study was conducted by Nest Insight, a collaborative research unit set up to help understand and address the challenges facing Nest members, in partnership with Invesco, an independent investment management firm.
The study is the latest of Nest Insight’s yearly reports evaluating the progress of the UK’s auto enrolment system, and uses data from the Nest workplace pension scheme to explore the experience of employers and workers using Nest.
The yearly report would normally be based on data from the fiscal year – in this case 2019/20 – which ended in March 2020. However because of the disruption of the coronavirus pandemic, this report has been extended to cover an extra six months, and so contains data to September 2020.
There were 9.2m total and 4.4m active Nest members at 31 March 2020. Since April 2019 workers and employers have together been contributing a minimum of 8% of earnings into a pension pot, and only a small minority of workers are opting out of saving in Nest once they’ve been enrolled in the scheme.
The experience of Nest members shows the staying power of making saving the default for people. Even through significant market volatility, most Nest members kept saving for their retirement. And this was true for a population with a higher proportion of both lower earners and workers in transient employment than the overall UK labour force – the median Nest member’s annual income is £19k as compared to the UK average of just under £25k.
The authors conclude that the government’s decision to support auto enrolment during the pandemic probably played a significant role. By paying the employer’s share of pension contributions as well as 80% of worker wages in the first months of the Covid-19 crisis, the government signalled that building more retirement security for people in the UK remained a high priority alongside preserving businesses and jobs.
The authors also state that it is too early to analyse the full effects of the Covid-19 crisis on people’s attitude towards saving for retirement, as it will be greatly influenced by how quickly the economy and markets recover.
Richard Notley and Matthew Blakstad, Nest Insight, London
