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Research reveals surprising support for increases to AE contributions levels

One of the areas that will be high on the new minister for pensions’ to-do list will be the forthcoming review of automatic enrolment (AE). The outgoing minister had regularly said that AE contribution levels would need to be revisited early in this parliamentary term, and new research by Jelf Employee Benefits reveals employer support for such proposals.

The survey of more than 200 senior HR and finance professionals found that more than three in four (76 per cent) employers believed that an increase in pension contribution levels should be made. Only 15 per cent of respondents felt that no increase was necessary.

The findings also reveal that 85 per cent of employers believe 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.

Commenting on the results, Steve Herbert, head of benefits strategy at Jelf Employee Benefits, said: “Frankly, we were a little surprised at these results. Many employers are yet to reach their staging date for AE, 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.”

He continued: “That said, it’s very encouraging that employers continue to see the benefits of offering a quality pension scheme. A good pension offering will obviously help employees, and will also provide an important recruitment, retention and planning tool for employers.”

The survey also found that more than four in 10 employers would consider taking early action to increase contributions in advance of any legislated increase, thus smoothing the higher cost over a number of years.

Herbert concluded: “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 AE duties – may now have learned the lesson that forward planning is imperative in group pension provision.”

Jelf Employee Benefits has launched an AE proposition to support employers through the process: Jelf AEase.

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