Employee Benefits Workplace Savings and Pensions Research 2011: Contributions

Many employers are already contributing more to their pension schemes than will be required under the Pensions Act 2008, says Debbie Lovewell

When the Pensions Act 2008 begins to come into effect next year, employers will be required to auto-enrol all eligible employees into either a qualifying workplace pension scheme or the government-run national employment savings trust (Nest). For organisations that do not already have good levels of take-up, this could increase the cost of pension provision significantly. So employers that can increase take-up ahead of schedule may be better able to manage the cost increases gradually.

Just over half (56%) of respondents that operate a contract-based defined contribution (DC) scheme currently have more than half of their eligible workforce enrolled into their plan. However, these figures do not take account of employees who may belong to another type of pension, such as a trust-based DC scheme or defined benefit plan, so the organisation’s overall pension take-up may be higher.


Ultimately, how much employees save into their pension will determine whether they can build up sufficient funds to live on during retirement.

Under the pension reforms due to come into effect starting from late next year, employers will be required to make a compulsory contribution for all employees who do not opt out of pension membership. The amount will increase over several years to 3%.

Encouragingly, a large proportion of our sample already contribute more than will be required of them under the new legislation.


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