23% pay a 5% contribution into employees’ pensions

Angela Seymour-Jackson- AegonAround a quarter (23%) of respondents are paying a 5% contribution into their employees’ pensions, according to research by Aegon.

Its survey of 508 employers also found that 92% of respondents make a 2% contribution, ahead of this becoming the required minimum employer contribution rate under auto-enrolment from 2018.

The research also found:

  • 85% contribute 3% of employees’ salary or more, as required by 2019.
  • 72% of respondents say that fewer than half of their employees are personally topping up the workplace pension contributions they make as an employer.
  • Respondents that contribute 1% into their employees’ pension see an average of 0-10% of their staff topping it up. This average increases to 20-30% of the workforce for respondents contributing 5%, and to 30-40% for those employers contributing more than 10%.
  • Just under half (44%) of respondents have seen an increase in the number of employees making personal contributions to their workplace pension over the last five years, compared to 23% that have seen a decline.

Angela Seymour-Jackson (pictured), managing director of workplace solutions at Aegon UK, said: “Auto-enrolment has thrust workplace pensions into the spotlight more than ever before, and the Department for Work and Pensions’ (DWP) latest campaign to raise awareness amongst smaller employers will take this even further.

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“But getting staff to save is just the first step. Contribution levels by both employers and employees need to increase if people are to achieve the lifestyle they want in retirement.

“It’s good to see employers are for the most part already contributing more than they are required to and most are seeing staff contribution levels rise a result. There appears to be a clear correlation between employer contribution and staff engagement, and employers have more power than ever before to emphasise the importance of solid pension contributions.”