The amount of money being saved into workplace pensions has flatlined over the last decade and could actually fall in the future due to the low contribution levels set by the governments auto-enrolment rules, a survey of employers has revealed today
A survey of 308 employers by the Association of Consulting Actuaries found that six out of ten employers support the idea of 'automatic escalation schemes' that see workers increase their pension contributions in line with pay rises.
According to the survey, average rates of contributions into defined contribution pension schemes have changed very little over that last decade, with rates generally failing to keep pace with the pension costs of longer life-spans and an economic climate with low investment returns.
In the ACA's 2013 Pension trend survey, chair Andrew Vaughan said that as more employers auto-enrol their workers in pension schemes at 2% of qualifying earnings, it was likely that average contributions to pensions would decline under 2018. This is the year that the contribution level will increase by 1 percentage point, and be supplemented by 5% from employers to reach the minimum of 8% of qualifying earnings.
'Auto-enrolment on its own isn't enough,' Vaughan warned. 'That is why we support the 'Defined Ambition' agenda and the survey is also encouraging in showing employers' support for auto-escalation schemes.
'With the State Pension Age moving towards 70 for today's younger employees, the added value of higher private pension savings is becoming clear. It is certainly time to save more for tomorrow.'
The poll also found that employers were most concerned about the processes involved setting up workplace auto-enrolment schemes in the year ahead. Regulatory complexity of the programme was ranked as the second biggest concern overall, but was the top problem named by smaller employers.
In addition, eight out of ten smaller employers have not yet budgeted for the likely increase in costs arising from auto-enrolment, the report found.