The majority of employers are in favour of automatic enrolment into personal accounts, according to a report by the Department for Work and Pensions.
The survey of 2,500 private sector employers reveals 60% are in favour of automatic enrolment as a way of encouraging saving for retirement, helping overcome inertia and increasing the take-up of pensions.
A majority (57%) believe a minimum employer contribution is a good idea, with 65% saying the proposed level of 3% is about right or too little and 27% saying it is too much.
In addition, 73% of employers said a minimum employee contribution is a good idea with 74% saying the proposed level of 4% is about right or too little.
When employers were asked how they might respond to an increase in pension contributions, 23% said they would most likely increase prices, 18% said they would lower wage increases and 20% said they would use existing overheads. A further 21% said they might re-structure or reduce their workforce and 1% said they might close down.
Overall, 72% of employers who offer some sort of pension provision said they are unlikely to make any changes to their existing scheme as a result of the proposals.
The report also reveals the majority of employers support phasing-in the minimum employer contribution (63%), but there is less support for phasing in automatic enrolment so that it applies initially only to new employees (45%).
A majority (59%) of employers believe a national scheme run by a central agency responsible for pension administration and investment is a good idea and 81% said low charges are a very important or fairly important feature of the new scheme.
Over six in 10 employers think the portability of a national scheme holds considerable benefits for employees, but only 17% believe it holds considerable benefits for employers.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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