01142747576 bestadvice@knowleswarwick.com

70% of small firm employees save into workplace pensions

12th April 2019

Smaller employers have seen their workers' participation in workplace pensions increase to 70% since the introduction of auto-enrolment, research from the Institute for Fiscal Studies (IFS) shows.

The report found that without auto-enrolment, 26% of staff in businesses employing fewer than 30 employees would have been saving into a workplace pension.

Once the scheme was introduced, this figure increased by 44%.

However, a gap in participation rates still remains between smaller and larger organisations, as 88% of employees in medium or large companies are members of a workplace pension scheme.

The reasons for this difference are unclear, the IFS says, as it cannot be explained by differences in the pay, occupation, gender or age of employees in small businesses.

Possible explanations include a lack of interest in pension saving among employees of smaller businesses, or less effective communication from employers about the benefits of a pension.

The IFS said another possibility is that smaller employers are encouraging employees to opt out, although this is against the rules of auto-enrolment and could result in a serious penalty.

The report added that "there's a case for going further" in improving auto-enrolment, for example by extending the band of earnings to include more people, or by increasing the minimum contribution rates.

Speak to us about workplace pensions.

Knowles Warwick Financial Services button

Click here for the Quickbooks website Xero Gold Partner Accountants Sage accountants, experts in cloud accounting, Sheffield, South Yorkshire ICAEW Chartered Accountant B1G1 Business for Good Click here for the ACCA website Connect Yorkshire Free Index  Sheffield Chamber of Commerce Click here for the Caunce O'Hara website Steve Knowles Yorkshire Advisor of the Year 2019 finalist

Knowles Warwick Financial Services Limited is authorised and regulated by the Financial Conduct Authority (in respect of regulated investment, insurance and mortgage business). For regulated financial services, the Financial Ombudsman Service is the alternative dispute resolution provider.