Auto-enrolment concern over employer pension contributions

Employers plan to manage the costs of pensions auto-enrolment by reducing employer contributions for new joiners.

Research published by Aon Hewitt in January found that nearly one in three employers have considered reducing contribution levels for staff being auto-enrolled into existing defined contribution (DC) schemes.

James Patten, principal consultant at Aon Hewitt (pictured), said: “If employers were to auto-enrol non-members into their current scheme on the basis of existing contributions, that could lead to contribution costs many multiples higher than the absolute minimum.

“That is why we see one in three employers [deciding] that it would be sensible to offer contributions much closer to the minimum of 1% of qualifying earnings.”