Average combined pension contributions by employers and employees into defined contribution (DC) schemes at smaller firms have flatlined in an ‘alarming trend’ since 2010, the Association of Consulting Actuaries (ACA) has stated.

In its Smaller Firms’ Pensions Survey, the organisation found that in firms with 250 workers or less, average contributions by employees and employers in trust-based schemes has remained static at 9 per cent since 2010 and has been recorded at 7.5 per cent for contract-based plans. In order to combat this, the ACA stated that financial incentives are key in order to increase contribution levels and that the government should raise minimum pension contributions on band earnings.

ACA chairman Andrew Vaughan said: “At present, three quarters of the UK’s smaller firms offer no pension scheme at all, but by 2018 there should be a ‘sea change’ in this situation, with all employers auto-enrolling their staff by then. Ahead of 2018, we need to be firmly addressing how we can get more people to save much more so they have a sufficient income in retirement.

“I would like to see the government and opposition pledge to raise minimum pension contributions on band earnings to 10 per cent by 2015 and 12 per cent by 2020, but with pledges to cut national insurance, earmarking reductions so they support extra private pension savings.”

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