Hopes of improving workplace pension contribution rates have received a boost from a new survey of over 300 UK employers undertaken by Harris Research for Royal London.
Ahead of April’s statutory increases in pension contribution rates, firms were asked a range of questions about the way they see workplace pensions and their plans for the future.
Key findings from Royal London survey
Just over three quarters of firms surveyed said that they ‘care’ about workplace pensions (78%) and a similar proportion said that they thought a workplace pension was an ‘important benefit’ (77%).
Nearly two thirds said they would be prepared to offer a facility for members to increase their pension contribution rates when pay increases (66%) and nearly as many said that they would be likely to match such an increase (62%).
However, employers thought that the main responsibility for boosting workplace saving lay either with the member (35%), the pension provider (30%) or the government (18%), with only small numbers saying that employers (6%) or advisers (5%) had the main role to play.
Steve Webb, Director of Policy, Royal London commented: “Although employers have many other things to concentrate on, they have a crucial part to play in nudging their workforce to save more.
“Most experts agree that the 8% total contribution rate which will be reached in 2019 will not be enough to provide a comfortable retirement for most workers on middle and higher incomes. The willingness of employers to consider ‘automatic escalation’ of contributions to coincide with pay increases is very encouraging. This approach has worked well in the US and in some leading UK companies and offers the best prospect of getting contribution rates up to realistic levels.
“To continue the success of automatic enrolment, schemes must be reviewed so that employer’s needs and long term goals are met. But it’s not just about the scheme that’s in place; it’s about how its benefits are communicated to employees. Employers, under the guidance of financial advice, must look to send out regular and engaging communications to their staff to actively encourage them to save more.”