One in five SMEs plan to contribute more than the minimum for auto enrolment

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For immediate release: Tuesday 15 April 2014


  • Of those that plan to contribute more, over half think a more generous employer contribution will help attract and retain staff
  • 43% think that the minimum employer contribution has been set too low and 39% think it will encourage employees to contribute above the minimum

With over 18,000 SMEs* reaching their auto enrolment staging date in April and May, new research from NOW: Pensions reveals that nearly one in five (17%) employers plan to contribute more than the legislative minimum when they enrol their employees into a workplace pension.

Of the 450 SMEs surveyed**, 8% say they intend to pay more than the minimum with a further 9% stating that they will pay the minimum initially, with a view to increasing contributions over time.

A more generous pension for recruitment and retention

Over half (56%) of those surveyed who intend to pay more than the minimum say they believe it will help with the recruitment and retention of employees. Four in 10 (43%) think the minimum employer contribution has been set too low by the government. More than a third (39%) hope that by contributing more, their employees will be encouraged to do the same. Nearly a quarter (24%) say they don’t offer any other benefits so are happy to spend a bit more on providing a more generous pension.

Of those 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 – a figure that over time, could equate to an additional £49,296 in the pension pot of someone on an average UK salary.

Morten Nilsson, CEO, NOW: Pensions said: “The perception is that large firms offer better pension provision than their SME counterparts but this isn’t necessarily true. Smaller companies very often know their employees personally and have a more paternalistic attitude.”

Compliance top of the agenda
Of the 40% of firms that plan to make minimum contributions, four in ten (41%) say it is because their focus is on ensuring compliance. A third (33%) claim they want to keep things simple and think paying
more would complicate matters, while over a quarter (26%) say keeping costs low is a priority. A further one in five (21%) say trading conditions are difficult so they are tightly managing their employee remuneration.

Nilsson continues: “Auto enrolment is a legal obligation but many companies are waking up to the benefits of offering a more generous pension package.

“The reality is that a combined pension contribution of 8% isn’t going to be enough for most people to have 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.”

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.


For further information:

Amy Mankelow
NOW: Pensions
Tel: 07941 105879

Victoria Leyton
Lansons Communications
Tel: +44 207 294 3620

Notes for editors:
* 6,100 companies employing between 160 and 249 employees are staging in April. 12,200 companies employing between 90 – 159 employees are staging in May.
**Research conducted by BDRC Continental business omnibus between 3rd and 13th March 2014 with SMEs up to and including 250 employees.

Auto enrolment total legislative minimum contributions

Period Employee pays Employer pays
To 30 Sept 2017 1% 1%
1 Oct 2017 to 30 September
3% 2%
From 1 October 2018 5% 3%

NOW: Pensions @nowpensions

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:

  • 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
  • Imelda Walsh, former Group HR Director of Sainsbury’s
  • 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.

NOW: Pensions has a good technical infrastructure combined with a pension product suitable for our team. We couldn’t be happier with NOW: Pensions.
Martin Woods,