Written By Holly McHugh, BrightPay Payroll Software: Results from a study of Defined Contribution (DC) showed that when it comes to automatic enrolment, UK employers are only willing to pay 37.5% of the 8% total minimum contributions from 2019. This is considerably low in comparison with the rest of the globe.
The Pensions Policy Institute (PPI) conducted an International comparison of employer and employee contributions to Defined Contribution pension schemes. The research was based on country experiences and factors related to employer/employee contribution balances.
Other reports, such as Professional Pensions, found that Italian employers would offer 84.8% of the minimum contributions from 2019. This is 47.3% higher than the UK. Other relative comparisons were Denmark at 66.7% and Japan at 50%.
New Zealand was the only country that was paying less, as employers would provide just 27% of total minimum contributions. However, the figure rose for those in the bottom tier to 50%. The lowest minimum contribution that an employer made to an employee in New Zealand was 3%.
The research was commissioned after a 2016 survey conducted by Master Trust revealed that 24% of automatic enrolment savers admitted that they ‘definitely will’ or ‘might’ opt out when minimum contributions hit 8% of qualifying earnings in April 2019. On the other hand, 74% of those who said they would opt out, said they would either ‘definitely’ or ‘probably’ continue to save into their workplace pension if employers put in a minimum of 5%, with a 3% staff contribution.
The full report can be accessed and downloaded through the PPI’s website.
Written By Holly McHugh, BrightPay Payroll Software. Exhibiting at Accountex Summit North on stand 34.