Actuaries have called on the next government to review the auto-enrolment policy in a bid to help small firms meet the cost of sharp increases in minimum employer contributions, due to take effect in October 2017.
The Association of Consulting Actuaries said the challenge for smaller employers was particularly great due to low earnings in the sector and the short period many firms and employees would have between auto-enrolling employees in 2015 and 2016 and big hikes in minimum contributions set for 2017 and 2018.
The ACA also said it was 'fearful' that low earnings in small firms could lead to employee opt-outs rising markedly as minimum auto-enrolment contributions increase from 2% of band earnings to 5% in 2017 and 8% a year later.
A government review was needed to assess whether enhancements could help both employers and employees manage the increase in pension contributions, the ACA said.
It suggested that the next government make reductions in employers' and employees' National Insurance contributions to safeguard auto-enrolment plans.
ACA chair David Fairs said that, in the longer-term, average pension and savings rates should increase so more people enjoy a comfortable income in part or full retirement.
But he added: 'In the near term, government may need to be pragmatic and consider some targeted financial incentives to help deliver the desired policy outcome of wider and deeper pension coverage in smaller firms.'
