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The Actuary The magazine of the Institute & Faculty of Actuaries

Financial services ‘most generous on auto-enrolment contributions’ 

Almost a fifth of small- and medium-sized employers in the financial services and property sectors plan to contribute more than the legal minimum into their employee’s auto-enrolment pension, a poll by Now Pensions has found.


Pension payslip
Photo: iStock

A survey of more than 400 firms by the pensions trust found that a further one in ten (10%) in that sector said they intend to increase their contributions over time.

According to the poll, the financial services and property sectors was the most generous in terms of auto-enrolment employer contributions. By contrast, only 1% of construction firms said they would pay more than the legal minimum contribution. This was followed by the arts & leisure and manufacturing sectors, 2% and 3% respectively.

Around 12% in the service industry said they were willing to pay more than the minimum employer contribution for auto-enrolment, followed by the education and health sector with 9%.

However, only 8% of the SMEs surveyed said they would pay more than the minimum, with a further 9% stating that they would pay the minimum initially, with a view to increasing contributions over time. 

Morten Nilsson, chief executive of NOW Pensions, said employers in the financial and property sectors were ‘waking up’ to the benefits of offering their employee a more generous pension package.

‘The perception is that large firms offer better pension provision than their SME counterparts but this isn’t necessarily true,’ he said. ‘Smaller companies very often know their employees personally and have a more paternalistic attitude.’

A more generous pension was intended to help in recruiting and retaining staff, according to more than over half (56%) of those polled who intend to pay more than the minimum.

However, 43% said that the minimum employer contribution was set too low by the government.  More than a third (39%) hoped that by contributing more, their employees would do the same.

Around 40% of the firms that plan to make minimum contribution said it was because of their focus on compliance.

A third claimed they want to keep things simple and think paying more would complicate matters, while over a quarter (26%) said keeping costs low was a priority A further 21% said difficult trading conditions meant they so they were tightly managing their employee remuneration.