Quarter of service sector SMEs could offer increased pension contributions

By Liam Garrahan contact

- Last updated on GMT

Quarter of service sector SMEs could offer increased pension contributions

Related tags: Pension

Twenty six per cent of service sector SMEs are willing to contribute more to their employee’s pension schemes than the minimum amount, according to a survey by NOW: Pensions (NP).

The survey follows the government’s new automatic enrolment pension legislation that states that every employee over the age of 22 must be enlisted into a company pension scheme with a minimum contribution of eight per cent.

Of the 26 per cent, 15 per cent say that they will pay more than the requirement as soon as automatic enrolment comes into force, whereas the remaining 11 per cent stated that they will pay the lowest amount initially before increasing it over time.

The survey found that 34 per cent of SMEs felt that the government’s suggested pension contribution would not be enough to guarantee a comfortable retirement for their employees.

Morten Nillson, chief executive of NP, agrees:

“The reality is that even when auto enrolment is fully rolled out, a combined pension contribution of eight per cent still isn’t going to be enough for most people. 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,” he said.

One fifth of SMEs (22 per cent) are happy to offer a larger contribution as they do not offer other benefits to their workforce and an equal proportion feel that it is their responsibility to ensure that their staff have a comfortable retirement.

Of the firms in the service sector that are planning to make the minimum contribution to the pension schemes 24 per cent say that their priority is keeping costs low, with 19 per cent saying that they would rather not offer a pension at all.

Related topics: Business

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