On the go: FTSE 100 employers are paying more than ever into their staff's defined contribution pensions, and are some way ahead of auto-enrolment minimums, a new report has found.
The core contributions paid by blue-chip employers grew to 7.1 per cent in 2019, from 6.4 per cent in 2018, according to Willis Towers Watson’s annual FTSE 350 DC Pension Scheme Survey.
Three quarters of FTSE 350 schemes have a matching contribution design, and among these the FTSE 100 core pension contributions are 6.5 per cent of annual salaries, up from 5.6 per cent last year, with the average maximum contribution now 17.4 per cent for employer and employee contributions combined.
Willis Towers Watson's research found that FTSE 250 companies also increased their core pension contributions. They now contribute 6 per cent of annual salaries, up from 4.1 per cent in 2018, with a maximum total contribution of 14.8 per cent.
Richard Sweetman, senior director at Willis Towers Watson, said: “It’s encouraging that these employers have sought to reassess and take action on their contribution levels and the scheme’s offering as a whole, likely given impetus by the final step-up of minimum auto-enrolment contribution rates in April 2019.”
According to the survey, DC master trusts have continued to rise in popularity among FTSE 100 companies.
The proportion of FTSE 100 companies using DC master trusts increased by a third in the last year, from 15 per cent to 21 per cent, whereas in the FTSE 250 the number remained stable at around a fifth.
Those companies with master trusts have been most likely to take action on their contribution rates, with 67 per cent of master trusts updating their scheme in the past two years.
