Small firms boosting AE pots with above-minimum contributions
Over a third of small and medium enterprises (SMEs) that have already staged for auto-enrolment (AE) are contributing more than the statutory minimum.
More than half also want to see employees who currently earn above or below the AE thresholds - £5,824 and £43,000 respectively - to be able to qualify for AE.
The opinions were revealed in a survey commissioned by The People's Pension in December. The research, conducted by YouGov, asked 898 senior decision-makers at SMEs for their opinions.
The poll showed 37% of SMEs were already paying above the mandatory 1% minimum contribution rate to all employees who had been auto-enrolled.
Contribution rates currently total 2%, including a 1% contribution from the employer, 0.8% from the employee, and 0.2% tax relief. The rates are set to rise to 5% next year, and 8% in 2019.
The master trust's director of policy and market engagement Darren Philp welcomed the proactivity of these SMEs.
"One of the most surprising things from this survey was that 37% of SMEs that had staged were paying above the AE minimum contributions, which is potentially great news for their employees' future retirement incomes," he said.
The survey also revealed that three-fifths of employers believed it was fair that all employers are required to be part of the AE regime, while 50% of employers that had already staged thought AE was good for their business.
Two-thirds of employers that had already staged were positive about AE, compared to 49% of those which will stage in the next couple of years.
A separate 43% thought there should be no opt-out procedure for employees and that all eligible employees should be made to pay into a workplace scheme, while 46% said businesses had a role to play in minimising opt-outs.
Philp said the views were encouraging for the future of AE.
"It's good to see the majority of SMEs, whether they've staged or not, support AE being applied to all employers," he said. "Those that have already staged are more positive, which might be because having been through the process they know it's not as hard as they expect - and can see how beneficial it is for their employees."
He also called on the government to consider bringing more workers into the AE regime in its upcoming review of the regime, pointing to the SMEs' support of such an approach.
Part-time workers, who are more likely to be women, are often excluded from AE due to the nature of their work. Department for Work and Pensions (DWP) statistics published in October revealed just under two-thirds of women are currently eligible for AE, compared to 76% of all workers.
Across all businesses, just 36% of the DWP's target market are female. The department anticipates 4 million women will be auto-enrolled by 2020, compared to 7.2 million men
All employers are required to complete the AE process by 2019.
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