Three in four of firms want £10,000 earnings trigger to be reduced or removed
Employers support the targeted extension of automatic enrolment to more workers. 74% of businesses want to see it made available to the self-employed and those earning less than £10,000, allowing for more part-time workers and those with multiple jobs to better save for their future retirement.
A CBI/Scottish Widows survey of 240 firms finds near unanimous recognition of the business case (98%) and moral case (95%) for providing a competitive workplace pension. Auto-enrolment has led to 10 million workers saving more for retirement, and employers support going further. How far and how fast it is possible to do so will depend on boosting productivity so that it is affordable for businesses and savers. On auto-enrolment, the survey found that:
- Automatic enrolment is well understood. Only one in fourteen firms (7%) struggle to understand their automatic enrolment duties and only one in six (16%) have difficulty understanding how to assess employee eligibility
- More than seven in ten businesses (71%) believe that for their employees to have sufficient levels of retirement income, employers will need to make higher contributions to automatic enrolment schemes at some point in the future
- However, businesses do not believe now is the right time. There is only limited support for achieving higher contributions by increasing employers’ contributions (27%), employees’ contributions (40%), or through increases to contributions by both employers and employees (35%).
- Instead, the vast majority of business leaders (93%) believe that businesses should focus on improving employee engagement with their pension savings to boost voluntary contributions.
Matthew Fell, CBI Chief UK Policy Director, said:
“More people are saving into a pension than ever before and businesses believe that auto-enrolment has been a run-away success that must be built on.
“If we’re to get even more people into the habit of saving, then auto-enrolment must be extended to the self-employed and more of those holding down multiple jobs. But while higher contributions will be needed in the future, now is not the time to raise mandatory contributions again. The government must first be given the chance to deliver the findings of the automatic enrolment review and fully assess the impact of the increase to contributions in April 2019.
“Businesses of all sizes are committed to workplace pensions. Firms contribute billions of pounds to employees’ pension pots every year and the vast majority believe there is a strong business and moral case for them to do so.
“Increasing staff engagement with their savings is a must. But there is also a growing concern about the essential balance between funding defined benefit schemes and investing in the future.
“It will be important for government to take steps to help firms who want to continue to sponsor these schemes. In the end, a strong solvent employer is the best security for a pension scheme.
“Working together, businesses and government can set a path that continues to boost
the number of workers saving for their retirement and the amount that they are saving.”
Pete Glancy, Head of Policy at Scottish Widows said:
“While automatic enrolment has made an unprecedented positive impact on long term saving, the UK is still falling short. We know that 60% of 20-29 year olds are not saving enough for retirement and more than a fifth of UK adults expect they’ll never be able to afford to retire.
“As policymakers review the impacts of the 2019 increases and start to consider how best to achieve the necessary level of savings, it’s going to be important to find solutions which minimise increases to the overall costs of labour.
“British businesses have played a huge role in the success of automatic enrolment and it’s encouraging to see that the overwhelming majority of business leaders view providing a competitive workplace pension provision as a win-win for employers and employees.
“Engagement is clearly a key priority for employers and they should look to see what help is readily available. Pension providers, corporate advisers and employee benefits consultants often offer a wide range of services to support employers wanting to engage their workforces with pensions, from help online or face-to-face support in the workplace, through to salary sacrifice arrangements.