Four out of five employers believe minimum auto-enrolment contributions should rise, but they are divided over who should pay for it, a survey of 400 employers has found.
The survey, conducted online by Hargreaves Lansdown, found widespread support for greater contributions to auto-enrolment, with 53 per cent saying all earnings should count towards pension contributions, and not just earnings between £5,876 and £45,000.
But they were divided as to how the burden of increased contributions should be shared, with just 6 per cent saying employers should shoulder all the increased cost and 31 per cent thinking employers should shoulder a greater share of the cost increase.
The research identified support for using auto-enrolment to increase financial resilience through products beyond pensions, with 60 per cent support using automatic enrolment through the workplace to nudge employees towards building an emergency cash fund.
Employers have mixed feelings about the how many of their staff will stay in their company pension when contribution levels increase to a minimum 5 per cent in 2018 and 8 per cent in 2019. A third of employers predicted opt-out rates would be below 10 per cent, whereas 15 per cent thought they would exceed 20 per cent.
Over half of employers polled back workplace financial education to boost understanding amongst their staff, although a further 30 per cent think improving the provision of financial education in schools would be most effective. Just 5 per cent supported a financial healthcheck at age 50, a key piece of the Government’s Fuller Working Lives initiative.
More than a third – 37 per cent – of businesses are worried that their staff will not be able to afford to retire.
Hargreaves Lansdown senior pension analyst Nathan Long says: “Auto-enrolment was met originally with groans from employers who perceived further disruption to their staff and an increase to their staffing costs. Only five years on and employers are now calling for auto-enrolment to go further. Employer support to get more people saving at a greater rate and with a greater cost shouldered by the employer suggests the next wave of auto-enrolment can be as successful as the first.
“A large minority of employers are worried their staff will never be able to afford to retire and how this will impact their business. This explains the healthy support from employers to auto-enrol the self-employed, so that future staff do not have gaps in their retirement saving.
“Employers seem split on how many staff will stick with saving for retirement, with some believing opt-out rates will remain low, whilst others think they will go soaring.”