WiredGov Newswire (news from other organisations)
Printable version

CBI: Businesses support extension of auto-enrolment

74% of businesses want to see it made available to the self-employed and those earning less than £10,000

Employers support the targeted extension of automatic enrolment to more workers. 74% of businesses want to see it made available to the self-employed and those earning less than £10,000, allowing for more part-time workers and those with multiple jobs to better save for their future retirement.

A CBI/Scottish Widows survey of 240 firms finds near unanimous recognition of the business case (98%) and moral case (95%) for providing a competitive workplace pension. Auto-enrolment has led to 10 million workers saving more for retirement, and employers support going further. How far and how fast it is possible to do so will depend on boosting productivity so that it is affordable for businesses and savers. On auto-enrolment, the survey found that:

  • Automatic enrolment is well understood. Only one in fourteen firms (7%) struggle to understand their automatic enrolment duties and only one in six (16%) have difficulty understanding how to assess employee eligibility
  • More than seven in ten businesses (71%) believe that for their employees to have sufficient levels of retirement income, employers will need to make higher contributions to automatic enrolment schemes at some point in the future
  • However, businesses do not believe now is the right time. There is only limited support for achieving higher contributions by increasing employers’ contributions (27%), employees’ contributions (40%), or through increases to contributions by both employers and employees (35%).
  • Instead, the vast majority of business leaders (93%) believe that businesses should focus on improving employee engagement with their pension savings to boost voluntary contributions.

Matthew Fell, CBI Chief UK Policy Director, said:

“More people are saving into a pension than ever before and businesses believe that auto-enrolment has been a run-away success that must be built on.

“If we’re to get even more people into the habit of saving, then auto-enrolment 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. The government must first be given the chance to deliver the findings of the automatic enrolment review and fully assess the impact of the increase to contributions in April 2019.

“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.

“Increasing staff engagement with their savings is a must. But there is also a growing concern about the essential balance between funding defined benefit schemes and investing in the future.

“It will be important for government to take steps to help firms who want to continue to sponsor these schemes. In the end, a strong solvent employer is the best security for a pension scheme.

“Working together, businesses and government can set a path that continues to boost

the number of workers saving for their retirement and the amount that they are saving.”

Pete Glancy, Head of Policy at Scottish Widows said:

“While automatic enrolment has made an unprecedented positive impact on long term saving, the UK is still falling short. We know that 60% 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.

“As policymakers review the impacts of the 2019 increases and start to consider how best to achieve the necessary level of savings, it’s going to be important to find solutions which minimise increases to the overall costs of labour.

“British businesses have played a huge role in the success of automatic enrolment 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.”

Businesses see good reason to provide competitive pensions

  • Three quarters of businesses (75%) believe that providing a competitive pension. scheme positively impacts their ability to recruit and retain employees and nearly two thirds (64%) believe it positively impacts their ability to motivate staff.

The cost of defined benefit schemes remains a cause for concern

  • Over eight in ten (81%) believe that the government should offer more support to defined benefit schemes who are struggling with costs but want to remain as the sponsor. This is consistently high across firms of all sizes and sectors.
  • Two thirds (66%) of business leaders reported that defined benefit schemes impact their ability to invest in capital to boost growth and productivity. Two thirds (66%) also reported that defined benefit schemes impact their investment in people and skills.
  • Two thirds (67%) reported that deficits negatively impact the company’s profile. Of which over a third (36%) believe this to be a major impact and three in ten (31%) believe it to be a minor impact.
  • Businesses want the government to help make defined benefit schemes more affordable for firms who want to meet their pension promises to staff. Eight in ten firms (80%) believe that all schemes should have the option of choosing CPI as their inflation measure rather than RPI.

Businesses want the government to prioritise educating people about their pension

  • Over three quarters of businesses (76%) want the government to prioritise educating people about the importance of engaging with their pension.
  • Business leaders are clear that they want a stable pension taxation system. Almost six in ten (58%) believe that preserving the current tax relief framework should be a key priority for the government. This rises to 78% among SMEs.
  • After years of pensions policy changes, nearly half of business leaders (48%) identified regulatory stability as another key priority for the government.
  • Businesses have played their part in delivering automatic enrolment, but they still have concerns about the cost and administrative burden. Four in ten (40%) believe that the Government should prioritise minimising the administrative cost and burden for employers. This rises to 66% amongst SMEs.

 

Original article link: https://www.cbi.org.uk/media-centre/articles/businesses-support-extension-of-auto-enrolment/

Share this article

Latest News from
WiredGov Newswire (news from other organisations)

How can data tell a story that keeps a vulnerable person safe?