A new survey has revealed that three in four employers think that auto-enrolment pension contributions should be increased.
The surprising finding came in a survey of more than 200 respondents by Jelf Employee Benefits, following the appointment of Ros Altmann as the new Pensions Minister.
During his time in office, her predecessor Steve Webb had flagged up the need for auto-enrolment contribution levels to increase. Until 30 September 2017, both employer and employee need to contribute a minimum of one per cent of qualifying earnings, rising to two per cent for employers and three per cent for employees until 30 September 2018.
From 1 October 2018, employers must contribute at least three per cent and employees five per cent.
In a speech after losing his seat in the 7 May general election, Mr Webb warned: “If the government doesn’t start thinking today about how it will get beyond 8 per cent by 2017-18 it won’t happen in this parliament.”
The Jelf survey found that 76 per cent of employers believed that an increase in pension contribution levels should be made and that 85 per cent thought this increase should be borne in part, or entirely, by employers. Only 14 per cent thought that the increase should be made only by the employee.
Steve Herbert, head of benefits strategy for Jelf Employee Benefits, said: “Frankly, we were a little surprised at these results. Many employers are yet to reach their staging date for auto-enrolment, and a significant proportion of those who have already staged are not yet at the full contribution rate. It is therefore somewhat surprising that employers appear so supportive about a further increase to their pension contribution costs already.”
The survey also found that more than more than 40 per cent of respondents would consider taking early action to increase contributions in advance of any legislated increase, to spread the higher cost over a number of years.
Mr Herbert added: ‘Smoothing any increased cost is a pragmatic stance, and indicates that employers are now more likely to react quickly to changes in the legal minimum pension provision for employees. This suggests that employers – many of whom struggled to meet their initial automatic enrolment duties – may now have learned the lesson that forward planning is imperative in group pension provision.”
Moore Thompson can provide comprehensive support to help employers through the auto-enrolment process and beyond, including:
- identifying the costs of auto-enrolment
- assisting with the auto-enrolment information
- payroll bureau support for auto-enrolment
- reviewing existing pension schemes for auto-enrolment compliance
- advising and assisting with setting up a new, auto-enrolment compliant pension scheme
- advising on and providing quotations for Sage software to assist with auto-enrolment and accounting.
For more information on our auto-enrolment services, please contact us.