The Department of Work and Pensions (DWP) has released the findings of the second stage of research into the proposed personal pensions accounts.

This time, it’s the turn of the employers to express their opinions through face-to-face interviews conducted by BMRB on behalf of the DWP. The results reveal:

• Strong support for automatic enrolment across all types of employers – this would encourage saving for retirement, help overcome inertia and increase the take up of pensions. This finding is borne out by findings, already published in the Government’s White Paper on pension reform, which show that a majority (60 per cent) of employers are in favour of automatic enrolment.




• Employers supported the idea of a portable pension account which employees would take with them when they moved employers.




• There was general consensus among employers that the balance of employee and employer contributions proposed by the Pensions Commission was acceptable (four per cent post-tax employee contribution, three per cent from the employer, and one per cent from the state as tax relief).




• Employers’ views on the idea of a three per cent minimum employer contribution varied. Some thought it was about right or even too little. Similarly, findings, published in the Government’s recent White Paper on pension reform, indicate that a majority of employers (57 per cent) think that a requirement for a minimum employer contribution is a good idea.




• Others, particularly smaller employers and those not contributing to a pension scheme, expressed concerns. Employers with concerns about a minimum employer contribution of three per cent felt that phasing in the level of employer contribution over time would allow for financial planning.




• Small employers also supported the idea that the scheme should be phased in by employer size with them being the last to comply.




• In general, employers suggested they would respond to a requirement of a three per cent minimum employer contribution in three main ways – absorb additional costs through profits; pass costs on through increased prices; or pass costs through to wages. There was limited mention of re-structuring and only a few employers mentioned the possibility of business closure.




• There was little evidence in this research of the prospect of ‘levelling down’ of existing pension provision in response to the Government’s proposals. Employers currently operating pension schemes with an employer contribution of three per cent or more reported they viewed their pension scheme as an important recruitment and retention tool that they would want to keep.




• Overall, smaller employers and those with a low take up of their existing pension scheme favoured the proposal for a National Pension Savings Scheme as it was perceived to be the most straightforward and to minimise the role of the employer. By contrast, larger employers, particularly those with a high take up of their existing scheme, wished to retain their own schemes arranged directly with providers.