For immediate release: Wednesday 2nd July 2014
With over 11,000 firms across the country set to automatically enrol their employees into a workplace pension in July, research* from NOW: Pensions reveals that those in the South appear to have won the postcode lottery when it comes to the generosity of employer contributions.
Of the 450 small and medium sized companies surveyed, just 5% of firms in the North say they intend to pay more than the minimum employer contribution for auto enrolment compared to 11% of firms in the South and 6% of companies in the Midlands.
However, Brummies’ luck could be changing as companies in the Midlands are the most likely to increase their employer contribution. In fact, one in six (16%) SMEs in this area have said that while they plan to pay the minimum amount initially, they will consider increasing contributions over time. This compares to 8% of firms in the South and just 5% of firms in the North.
Thinking about auto enrolment at your company, do you intend to pay more than the minimum employer contribution?
|Not initially but over time||5%||8%||16%|
The main reason why more than four in ten (44%) firms in the North intend to pay the minimum, is that their focus is on compliance cited by nearly half (47%), with nearly a quarter (24%) stating that keeping costs low has always been a priority for their firm.
Of the small and medium sized companies in the South who intend to pay more than the minimum either initially or over time, nearly two thirds (62%) say it’s because they think the minimum employer contribution has been set too low for a comfortable retirement. Over half (53%) think that contributing more than the minimum will help with the recruitment and retention of employees. Two in five (40%) believe that by contributing more than the minimum, they will encourage employees to do the same.
Of all companies that intend to contribute more than the minimum, over half (54%) haven’t decided how much more they’ll contribute while nearly a quarter (24%) say they intend to contribute 1% more than the legislative minimum. While 1% may seem like a meagre figure, over time it could equate to an additional £51,338 in the pension pot of someone on an average UK salary** so can have a significant impact on their retirement income.
Morten Nilsson, CEO, NOW: Pensions said: “Workers are facing a postcode lottery when it comes to their retirement income. Employers in the South are taking the lead, demonstrating a long term approach to ensure their staff have the best chance of a comfortable retirement. 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.”
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For further information:
Tel: 0203 640 9075 / 07887 604640
Tel: 0207 294 3620
Notes to editors
NOW: Pensions offers employers a choice of five standard auto enrolment contribution models. The models are designed to cater for all requirements, from those who want to comply with the legislation at minimum cost to those who want to offer their employees an enhanced benefit.
*Research conducted by BDRC Continental business omnibus between 3rd and 13th March 2014 with 450 SMEs of which 159 were in the North, 116 were in the Midlands and 175 were in the South.
** Average UK salary £27,000 according to ONS data published in December 2013.
Auto enrolment total legislative minimum contributions
|Period||Employee pays||Employer pays|
|To 30 Sept 2017||1%||1%|
|1 Oct 2017 to 30 September 2018||3%||2%|
|From 1 October 2018||5%||3%|
NOW: Pensions www.nowpensions.com
NOW: Pensions is an independent, multi-employer trust serving thousands of employers and hundreds of thousands of employees from a wide range of sectors.
A subsidiary of one of Europe’s largest pension funds, Danish pension scheme ATP, NOW: Pensions offers a simple and cost effective workplace pension solution direct to employers and via advisers and the payroll sector.
In April 2013, NOW: Pensions became the first master trust to attain the NAPF’s new PQM Ready Standard. The benchmark shows employers that NOW: Pensions is a well governed pension scheme with low charges and good member communications.
The NOW: Pension Trustee Directors, whose role is to safeguard the interests of members, comprises well-known industry figures with different areas of expertise:
- Jocelyn Blackwell, founding partner Dunnett Shaw
- Christopher Daykin, former Government Actuary
- John Monks, member of House of Lords and former General Secretary of ETUC and TUC
- Win Robbins, former Head of European Fixed Income at Barclays Global Investors
- Nigel Waterson, former Shadow Pensions Minister
Charges are just £1.50 per month administration charge (reduced administration charge of £0.30 – £1.00 to be applied during auto enrolment phasing for lower earners) plus a 0.3% annual product investment management charge, with no hidden charges.