AXA launches Save More Tomorrow

AXA has launched its Save More Tomorrow service on its Group Personal Pensions and Group Stakeholder products.

This latest enhancement aims to address the issue of participation versus engagement in group pension schemes, by automatically increasing the member's contribution by an agreed percentage at set time periods for the duration of the plan.

Research shows research shows that 68% of pension plan members think the amount they are saving is too low although only 14% of those planning to start saving actually do. The Save More Tomorrow proposition is agreed with the pension member at outset and automatically increases their contribution without any further action or decision making required.

Mark Rowlands, Head of Corporate Partnerships, AXA Corporate Benefits, said: "We have carried out extensive research around behavioural finance and were not surprised to find a lack of action and high levels of inertia when it came to planning and investing into a pension.

"People don't tend to engage with their pension scheme and often forget about it after they've made the initial decision to join. Although automatic enrolment has been successful in increasing participation by overcoming inertia it hasn't addressed the issue of people remaining at the low default savings rate that they initially join the scheme on.

"There are a number of ways we as an industry can improve contribution levels within group pension schemes and they centre round a combination of scheme design coupled with engaging and communicating with the scheme members.

"By automatically increasing contributions, we are helping people to increase their pension pot to deliver a better income in retirement. The real beauty of this enhancement is that the increases can be arranged to coincide with key dates, like pay rises, so that employees don't feel the pinch of a decrease in income."

Combining the Save More Tomorrow approach with automatic enrolment and limited investment choice has been successful in both encouraging employees to join company pension schemes as well as encouraging them to save more. Research from the USA saw Benartzi and Thaler witness a 78% adoption rate in one scheme as well as an increase in savings rates from 3.5% to 13.6% in less than four years.