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Employee Benefits News

Latest News
08 Jan 2014

Majority Of UK Employers Back

According to a new survey carried out by the Association of Consulting Actuaries (ACA), the majority of UK employers support the implementation of the so-called “auto-escalation schemes.” This is where pension scheme members contribute more to their pension pot over time, mainly due to increases in income.

The 2013 ACA Pension trends survey, which interviewed over 300 employers with more than 430 pension schemes, found that the concept of “auto escalation schemes” was supported by 57% of employers. Meanwhile, many of those polled report that contributions over the past year have been generally falling, though very slightly, mostly due to pensions costs and low investment returns.

The survey revealed that contributions into defined contribution pension schemes have remained relatively stable over the past ten years, with average employer contributions into such schemes ranging between 4.5% and 7% of earnings. Employers predict that over the next few years, contributions are likely to fall further, as initial auto-enrolment contributions are typically lower.

When it comes to auto-enrolment, the biggest challenge faced by employers is preparing for compliance. Many interviewees admit that the processes involved in getting ready for auto-enrolment are the most problematic area, followed by regulatory complexity and communications. However, the way problem areas were seen depended on the size of the company, with regulation emerging as a top concern for small businesses, whereas communication was a bigger challenge for large enterprises. The survey found that four in five small businesses have not budgeted for expected increases in costs associated with auto-enrolment compliance.

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