Pension Personal Accounts – Study into small employer responses to pension reformsWednesday, November 18th, 2009
On 12 November, the Department or Work and Pensions published the findings of research exploring small employers’ likely responses to the workplace pension reforms set to come into force in October 2012.
The main findings are:
- The idea of a ‘saving culture’ in which people take responsibility for saving for the future and do not rely heavily on credit was highly regarded by all employers.
- Although there was broad support for the general aims of the reforms, the economic climate at the time of the fieldwork meant that small employers were concerned about an increase to the cost of their businesses. This was apparent even among those employers that currently provided a company pension scheme and especially apparent among those providers with low participation rates.
- Employers found it difficult to estimate the cost of each administrative stage required to implement the reforms. This was partly due to a lack of understanding of the detail of the reforms and partly due to the way some small employers outsource their administration.
- However, respondents reported that previous government initiatives, such as National Minimum Wage and online tax returns, had been easy to implement as a result of straight forward communication from Government. They also noted that they had absorbed the costs of previous reforms without significant impact.
- Employers did not hold strong views on phasing, those who were not already contributing to a pension thought it was a good idea which would “soften the blow” of contribution costs. However, those already contributing to pensions felt that a 3% contribution at the outset would be less confusing and reduce administration.
- Employers typically said they would prefer the contribution rate changes in phasing to occur in April, in line with the financial year.
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