Auto Enrol at Higher Levels to Engage Staff
23 October 2012 (PLANSPONSOREurope.com) –UK employers will need to auto-enrol workers on at least 2% higher contribution levels than current legal requirements in order to engage staff, according to research from Jelf Employee Benefits.
Analysis of Department for Business & Innovation Skills figures by the consultant claims this can mean the difference between a 19.2% increase in operating income if employees are engaged, and a 32.7% fall if they are not.
Steve Herbert, director at Jelf, told PLANSPONSOR Europe the “bare minimum” combined contribution levels for auto-enrolment plans should be no lower than 10%.
“With auto-enrolment, 8% will be where everyone has to start from anyway – is that anywhere near enough? absolutely not,” he warned.
He added National Association of Pension Fund recommendations of 10% total contributions mark “a good starting point”.
“The bare minimum is 10% and is quite achievable for most companies but so many companies aren’t anywhere near that at the moment,” he added.
“They need to get above the NAPF minimum levels and quite above that time over again.”
But currently, he says, engagement with pensions varies from sector to sector, adding: “If you take the financial services sector, they are used to having very high levels of contribution anyway – 10% employer contribution level is not uncommon.
“If you take every other sector that is uncommon.”