Three-quarters of firms support AE extension

Almost three-quarters (74 per cent) of businesses want auto-enrolment (AE) to be extended to include the self-employed and those earning less than £10,000, a study has shown.

The research, conducted by the Confederation of British Industry (CBI) and Scottish Widows, found that a majority of firms wanted AE extended to allow more part-time workers and those with multiple jobs to better save for retirement.

Nearly all companies (98 per cent) agreed that there was a ‘business case’ for providing a competitive workplace pensions, with 95 per cent also saying there was a ‘moral case’.

CBI chief UK policy director, Matthew Fell, commented: “If we’re to get even more people into the habit of saving, then AE 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.

“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.”

The survey also found that businesses have a good understanding of AE, with only 7 per cent saying that they struggled to understand their AE duties, while 16 per cent had difficulty understanding how to assess employee eligibility.

However, 71 per cent of businesses said that employers will need to make higher contributions in the future for their employees to have sufficient levels of retirement income.

Despite this, most agree that now is not the right time, with only 27 per cent believing employer contributions should be increased now, 40 per cent said that employee contributions should be increased and 35 per cent saying both employers and employees should contribute more.

The vast majority (93 per cent) of firms think that businesses should focus on improving employee engagement with their pension savings to increase voluntary contributions.

Three quarters of businesses believed that providing a competitive pension scheme positively impacts their ability to recruit and retain employees, while 64 per cent believed it positively impacts their ability to motivate staff.

Seventy-four per cent of companies called on the government to prioritise educating people on the importance on pension engagement and 40 per cent believed that the government should prioritise minimising the administrative cost and burden for employers.

Scottish Widows head of policy, Pete Glancy, concluded: “British businesses have played a huge role in the success of AE 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.”

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