On the go: Three quarters of businesses back the extension of auto-enrolment to include the self-employed and those earning less than £10,000 a year, but have a limited appetite for mandatory contribution increases, according to new research.
A CBI and Scottish Widows survey of 240 companies also found near unanimous recognition of the business and moral case for providing a workplace pension. Auto-enrolment is well understood, with only one in 14 companies struggling to understand their duties and only one in six having difficulty understanding how to assess employee eligibility.
More than seven in 10 businesses say they believe employers will need to make higher contributions to auto-enrolment schemes in the future, but not just yet.
Just 27 per cent of companies favour higher mandatory employer contributions while 40 per cent favour higher mandatory employee payments, with just 35 per cent backing joint increases by both employers and employees.
The vast majority of business leaders believe that businesses should focus on improving employee engagement with their pension savings to boost voluntary contributions.
Commenting on the research, Matthew Fell, CBI chief UK policy director, said: “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 auto-enrolment review and fully assess the impact of the increase to contributions in April 2019.”
Pete Glancy, head of policy at Scottish Widows, added: “While auto-enrolment has made an unprecedented positive impact on long-term saving, the UK is still falling short. We know that 60 per cent 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.”
DB drags business down
The cost of defined benefit schemes remains a cause for concern. Two thirds of business leaders reported that DB schemes impact their ability to invest in capital to boost growth and productivity, with the same proportion saying it hinders their investment in people and skills.
Some 81 per cent say the government should offer more support to DB schemes that are struggling with costs but want to remain as the sponsor. On the controversial question of final salary inflation linking, 80 per cent say all schemes should have the option of choosing the consumer price index as their inflation measure.
