Saga has highlighted savers “affordability issues” after it said just 20-30 employees have taken up its ‘sidecar structured’ savings scheme, after it launched in January.
Speaking to Pensions Age, Saga group HR director, Karen Craddick, said that the savings scheme, similar to the sidecar trial launched by Nest earlier this week, has had a lot of positive feedback but that take up has been effected by people’s capacity to save.
Unlike the Nest trial, which is also in conjunction with Salary Finance, the Saga scheme does not have a ‘savings cap’ while the group will also match the employee’s saving contributions up to 10 per cent. Furthermore, it does not have tax efficient saving like the Nest scheme.
Craddick said: “About 20 to 30 people have taken up the savings scheme, but that shows you that we have an affordability issue in the business.
“Even the amount of people who have put more into their group personal pension, even though we’ve said if you pay more we’ll contribute more, there is not that may people who are taking advantage of it and people just can’t afford it.
“That’s always been my worry about the government increase in the auto-enrolment percentage, because I think there will be more drop outs.”
Despite this, Craddick believes that a rise in take up is a matter of time as the group roles out extensive education on saving.
“They are allowed to save as much as they want, what we recognise with employees is that pension is important but it depends where they are in their life stage, they might be paying off student debts of saving a deposit for a house,” she said.
“What we are saying to them is any saving is good saving, of course we want you to save as much into your pension as we can, but there might be certain points in your life where savings is as important.”
Saga added that the consultation has also allowed it to keep its defined benefit scheme open to new entrants.
“Keeping the DB scheme was really important for us, we’re a business that exists to help people in retirement, and I felt we needed to the business that gives people great benefits in retirement and we have managed to do it with costs we are prepared to pay for.”
In September, Saga’s DB pension scheme increased by £11.6m to a surplus of £4.6m between 31 January and 31 July 2018. The group contributes £2.5m annually into its scheme.