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Most employers favor automatic UK pension scheme enrolment, survey shows

New research from the UK government's Department for Work and Pensions has revealed that the majority of employers are in favor of automatic enrolment in pension schemes.

The Department for Work and Pensions report presents findings from a nationally representative quantitative survey of over 2,500 private sector employers in Britain carried out by BMRB.

The main findings include that, overall, 60% of employers were in favor of automatic enrolment. More specifically, 59% of organizations with less than 50 employees said automatic enrolment was a good idea, rising to 81% of employers with 250 or more employees.

A majority (57%) of employers said that a minimum employer contribution was a good idea, and 65% thought that the proposed minimum employer contribution level of 3% was either about right or too little. Just over a quarter (27%) thought 3% was too much.

Almost three quarters (73%) of employers said that a minimum employee contribution was a good idea and 74% of employers felt that the proposed employee contribution level of 4% was either about right or too little.

There was support for phasing in the minimum employer contribution. Almost two thirds (63%) of employers thought it would be helpful to phase in minimum employer contributions over time.

When employers were asked how they might respond to an increase in pension contributions, 60% said that they would be most likely to respond through either increased prices (23%), lower wage increases (18%), or through existing overheads (20%). A further fifth (21%) indicated they might restructure or reduce their workforce. Just 1% of respondents said that they might close down.

Overall, 72% of employers who offered some sort of pension provision said that they were unlikely to make any changes to their existing scheme as a result of the proposals, 14% said they were likely to make changes and 15% didn’t know or didn’t state whether they were likely to make any changes.

The survey forms part of a wider program of research and analysis to gather evidence to inform the government’s proposals on personal accounts, as set out in the white paper on pension reform published in May.