UK employers are lagging behind in terms of the proportion of pension contributions they are providing to their staff, a study of worldwide defined contribution (DC) provision reveals.
While UK employers will offer on average 37.5% of the 8% total minimum contributions from 2019, under auto-enrolment (AE), this is considerably lower than those provided to employees across the globe.
For example, the Now Pensions and Pensions Policy Institute (PPI) study found Italian employers would offer 84.8% of the minimum contributions from 2019 - 47.3 percentage points higher than the burden UK employers would bear.
This compared to 66.7% for Denmark, and exactly 50% for Japan.
The study also revealed the only country less generous than the UK was New Zealand, where employers would provide just 27% of total minimum contributions.
Nonetheless, the same study found the figure rose to 50% for employees in New Zealand's bottom tier - the lowest employer contributions offered in its AE scheme, KiwiSaver, are 3%.
The research was commissioned after a 2016 survey by the master trust showed just under a quarter (24%) of AE enrolled savers said they either ‘definitely will' or ‘might' opt out, when minimum contributions hit 8% of qualifying earnings in 2019.
However, it also found just under three quarters (74%) of those who said they would opt out would either ‘definitely' or ‘probably' continue to save into their workplace pension if contributions were rebalanced and employers put in a minimum of 5%, with a 3% staff contribution.
PPI senior policy researcher Priya Khambhaita said higher pension contributions are associated with improved retirement outcomes.
She added: "In comparing the UK scenario to countries that have nationwide AE schemes and other DC schemes, it is evident that there are a number of countries where the average employer contribution is higher than in the UK.
"Rebalancing the ratio of employer/employee contributions for a higher employer contribution could encourage a greater proportion of employees to continue to save in their workplace pensions."
Now Pensions director of policy Adrian Boulding said: "AE continues to evolve and the 2017 review is an opportunity to pause and reflect on the future direction of the policy."
The AE review will publish its findings later this year. It is considering the success of AE to date, and exploring ways in which the policy can be further developed in terms of engagement, contributions and coverage.
Boulding added: "The PPI report highlights that UK employers are not pulling their weight compared with other countries with similar regimes.
"Right now, the message is strong and clear - you pay in and your employer matches it. But as the higher statutory minimum contributions are phased in over 2018 and 2019, employees will find themselves bearing more of the burden than their employer and this inequality could drive opt outs."
In an exclusive interview with PP, Standard Life Aberdeen head of pensions strategy and one of the review's three chairmen, Jamie Jenkins, said the review was considering whether contributions need to rise further, and if they should be made discretionary.
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