NOW: Pensions today warned of a North-South divide in auto-enrolment, with pension contributions in the South being much higher than those offered by firms in the North.
2 JULY 2014 | | BY JUDITH UGWUMADU
The pension provider found in its poll of 450 small-to-medium sized companies that employees were facing a 'postcode lottery'. Workers in the South appeared to have more generous employer contributions, with some 11% of firms in the South intend to pay more than the minimum employer contribution for auto-enrolment. This is compared to only 6% of firms in the Midlands and 5% in the North.
Of those firms in the South that intend to pay more than the legal requirement towards an employee's workplace pension, around two-thirds (62%) said this was because they believe that the minimum employer contribution was set too low for a comfortable retirement.
More than half (53%) of firms in this region said contributing more than the minimum would be used as an incentive to retain staff, while 40% said they believed that contributing more than the minimum would encourage employees to do the same.
However, firms in the Midlands were most likely to say they would consider increasing their contributions over time. This was the response of 16% of firms surveyed, compared to 8% of firms in the South and just 5% of companies in the North.
Of all companies that intend to contribute more than the minimum, over half (54%) haven't decided how much more they would pay, while nearly a quarter (24%) said they intend to put in an extra 1% more than the legislative amount.
Meanwhile, the North (44%) was singled out as the region most unwilling to contribute beyond the legal employer requirement for auto-enrolment. Almost half (47%) of the firms in this region cited compliance as their main focus, while nearly a quarter (24%) said they wanted to keep costs low.
NOW: Pensions chief executive Morten Nilsson said: 'Workers are facing a postcode lottery when it comes to their retirement income.
'Employers in the South are taking the lead, demonstrating a long term approach to ensure their staff have the best chance of a comfortable retirement.
'If employers contribute even a small amount more than they are obliged to do, this can make a big difference to employees' final pension pots.'