Over two in five, or 43 per cent of business leaders, think auto-enrolment (AE) contributions should be raised, according to research from the Standard Life Centre for the Future of Retirement.
This compares with 36 per cent who prefer current levels, 6 per cent who would reduce contributions and 8 per cent who believe rates should be set individually by employers.
Employers with over 250 staff are more supportive of higher contributions, with around 54 per cent of firms backing a rise, while half of medium-sized employers (50–249 staff) also support increases.
These findings come from a survey of 500 business leaders conducted alongside the Defying Inertia report, produced with the Institute for Employment Studies, which explores employer appetite for pension reform and support for lower-to-middle earners.
The research highlights a clear motivation among employers to do more for their staff. Among those considering increasing pension contributions within the next five years, 37 per cent cite employee wellbeing and long-term financial security as the main driver, an equal proportion feel a responsibility to help staff save more for retirement, and 34 per cent view higher contributions as a way to attract and retain talent.
Most employers favour gradual increases, with 73 per cent supporting phased implementation over time, 72 per cent backing the option to pause or slow contributions during economic downturns, and 57 per cent supporting a faster rollout within 6–12 months.
The research notes that despite the success of automatic enrolment, gaps remain. Government estimates suggest over 15 million working-age people are on track for inadequate retirement income and while a Pensions Commission has been established to examine the issue, contribution rates will not change during this Parliament.
It also finds that employers broadly support measures to boost pension saving but emphasise the need for flexibility and a clear timetable during periods of economic uncertainty. Many highlight that current AE rules still exclude part-time workers, people with multiple jobs and younger employees while minimum contribution levels remain too low to deliver secure retirements.
The research shows openness to new savings tools, with 61 per cent of employers considering auto-escalation, 59 per cent payroll-linked ISAs and 49 per cent sidecar savings, although awareness and uptake remain limited due to complexity and cost. There is also strong support for widening access, with 75 per cent backing a lower AE age of 18 and 70 per cent favouring a reduction in the £10,000 earnings threshold, aligning with recommendations from the 2017 Auto-Enrolment Review which have yet to be implemented.
Standard Life Centre for the Future of Retirement director Catherine Foot says: “The success of auto-enrolment is to be celebrated, but it’s clear more needs to be done to support low-to-middle earners, in particular, with minimum contribution levels giving people a false sense of security that they are saving enough for the retirement income they need. Employers recognise the important role they must play with many doing more than the minimum, alongside supporting further change. Ultimately, ongoing inaction will mean costs will be borne by government and society further down the line. If changes are to be introduced, we need to ensure broad support. It’s also crucial that employers have time to prepare with a clear roadmap for change – this is about evolution not revolution to improve pensions adequacy.
“As the Pensions Commission considers the future of the system, we have a crucial opportunity to ensure it remains fit for future generations while giving employers certainty. There are important times ahead as employers, government and the industry restore the promise of a decent retirement for future generations.”
Standard Life managing director for Workplace and Retail Intermediary Gail Izat says: “Employers care deeply about supporting their people’s financial security, but they’re operating in tough economic conditions. Many know current pension contributions won’t deliver financial security in retirement for most employees, yet without a clear, manageable framework it’s hard for businesses to act alone. We need the right conditions to help employers raise saving levels sustainably, with enough time to plan and budget for change.”