Small and medium-sized employers are increasingly likely to contribute more than the auto-enrolment minimum according to new research. Thirty per cent of 400 SMEs surveyed say they plan to, or will consider, contributing more than the legislative minimum when they enrol their employees into a workplace pension, compared to just 17 per cent when the same question was asked in March 2014, according to the research conducted for Now: Pensions.
Of those that intend to pay more than the minimum, 17 per cent say they plan to pay more than the minimum from the outset with a further 13 per cent stating that they will pay the minimum initially, with a view to increasing contributions over time. In 2014 just 8 per cent said they intended to pay more than the minimum with a further 9 per cent stating they will pay the minimum initially with a view to increasing contributions over time.
Over half of those surveyed who intend to pay more than the minimum – 57 per cent – say they believe it will help with the recruitment and retention of employees, while 51 per cent hope that by contributing more, their employees will be encouraged to do the same and 39 per cent think the minimum contribution has been set too low for a comfortable retirement.
Now: Pensions CEO Morten Nilsson says: “The perception is that large firms offer more generous pensions than small companies but, this isn’t necessarily true. Many small employers want to offer their staff a benefit they’ll genuinely value and are willing to put their hand in their pocket to do so.
“There’s a danger that, because the government has set the contribution level, employers will assume that auto enrolment minimum contributions are sufficient to provide a comfortable retirement for their workforce.
“The reality is that even when auto enrolment is fully rolled out, a combined pension contribution of 8 per cent still isn’t going to be enough for most people. If employers contribute even a small amount more than they are obliged to do, this can make a big difference to employees’ final pension pots.”