1 August 2006 - Publication of DWP research report no. 371: Employer attitudes to personal accounts: Report of a qualitative study
Today, the Department for Work and Pensions publishes the findings of research exploring employer attitudes to automatic enrolment into personal accounts. This study forms part of a programme 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 2006.(1)
The report presents findings from in-depth, qualitative, research carried out on behalf of the Department for Work and Pensions by BMRB Ltd.
The main findings from in-depth, face-to-face, interviews with a range of employers show:
- Strong support for automatic enrolment across all types of employers – this would encourage saving for retirement, help overcome inertia and increase the take up of pensions. This finding is borne out by findings, already published in the Government’s White Paper on pension reform, which show that a majority (60%) of employers are in favour of automatic enrolment. (2)
- Employers supported the idea of a portable pension account which employees would take with them when they moved employers.
- There was general consensus among employers that the balance of employee and employer contributions proposed by the Pensions Commission was acceptable (four per cent post-tax employee contribution, three per cent from the employer, and one per cent from the state as tax relief).
- Employers’ views on the idea of a 3% minimum employer contribution varied. Some thought it was about right or even too little. Similarly, findings, published in the Government’s recent White Paper on pension reform, indicate that a majority of employers (57%) think that a requirement for a minimum employer contribution is a good idea. (2)
- Others, particularly smaller employers and those not contributing to a pension scheme, expressed concerns. Employers with concerns about a minimum employer contribution of 3% felt that phasing in the level of employer contribution over time would allow for financial planning.
- Small employers also supported the idea that the scheme should be phased in by employer size with them being the last to comply.
- In general, employers suggested they would respond to a requirement of a 3% minimum employer contribution in three main ways - absorb additional costs through profits; pass costs on through increased prices; or pass costs through to wages. There was limited mention of re-structuring and only a few employers mentioned the possibility of business closure.
- There was little evidence in this research of the prospect of ‘levelling down’ of existing pension provision in response to the Government’s proposals. Employers currently operating pension schemes with an employer contribution of 3% or more reported they viewed their pension scheme as an important recruitment and retention tool that they would want to keep.
- Overall, smaller employers and those with a low take up of their existing pension scheme favoured the proposal for a National Pension Savings Scheme as it was perceived to be the most straightforward and to minimise the role of the employer. By contrast, larger employers, particularly those with a high take up of their existing scheme, wished to retain their own schemes arranged directly with providers.
1. Department for Work and Pensions (May 2006) Security in Retirement: towards a new pensions system
2. These findings, which are based on a quantitative survey of employers, were published in the Government’s White Paper on pension reform, Security in retirement: towards a new pensions system, May, 2006. The full findings of this survey will be made publicly available as soon as possible (Employer attitudes to personal accounts: Report of a quantitative survey, Bolling, K, Grant, C & Fitzpatrick, A, forthcoming, 2006).
Notes to editors
- DWP Research Report No. 371 – Employer attitudes to personal accounts: Report of a qualitative study is published on 1st August 2006 by Corporate Document Services. The research was conducted on behalf of DWP by Helen Marshall and Andrew Thomas from BMRB Ltd.
- Free summaries are available from Paul Noakes at the DWP Social Research Branch (Room 4-26a, Adelphi, 1-11 John Adam Street, London WC2N 6HT, 020 7962 8557). The reports and summaries are available free on the DWP website; http://www.dwp.gov.uk/asd/asd5
- The qualitative research with employers involved one to one depth interviews with 75 private sector employers selected to reflect diversity in terms of size (number of employees), whether the employer made a contribution to a pension scheme or not, industry and geographical area. In addition, 8 interviews were conducted with individuals who employ others to provide a service in a non business context e.g. people who employ a nanny or a gardener.
- Qualitative research is illustrative and identifies the range of opinions and experiences of the participants and explores the reasons for these views. These studies provide indicative findings.
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