Majority of organisations offering above-minimum pension contributions

Almost nine in 10 (87.7 per cent) organisations offer pension contribution rates in excess of the current statutory auto-enrolment minimum, research from Gallagher has revealed.

The group's 2021 Benefits Strategy and Benchmarking Survey found that the minimum employer contribution as a percentage of salary has stayed the same as last year, with an average of “around 5-6 per cent”.

Pharmaceuticals and life sciences offered the highest average minimum employer contribution of 8.3 per cent, closely followed by asset management and banking, and finance and property development/management, at 6 per cent.

Construction, meanwhile, had the lowest average minimum employer contribution of 3 per cent.

The survey also found that whilst matching schemes "remain popular" and can be found in 23 per cent of organisations, there had been a "significant decrease" in the proportion of respondents with variable matched rates depending on employee’s contributions, with 10 per cent citing this compared to 16 per cent last year.

In addition to this, the report suggested that an "ever-growing number of employers" take the view that any detrimental taxation on pensions is a matter for the employee.

Indeed, it found that the number of respondents offering no compensation for losses or additional taxation arising from the lifetime (LTA) or annual allowance limit had increased “significantly” from 58.1 per cent last year to 67.6 per cent this year.

Gallagher also said that it is "surprising" how few organisations provide any form of financial education or advice to employees, in light of the number of employees affected by the LTA and annual allowance.

However, the findings suggested that there is an upward trend in the overall provision of financial advice, perhaps driven by the pandemic, with the number of organisations offering no financial advice decreased from 56.6 per cent to 46.2 per cent.

Furthermore, whilst less organisations are offering group advice, down from 31.6 per cent last year to 28 per cent this year, 21 per cent are now offering access to an online solution.

However, just 1.3 per cent of organisations held pension presentations or benefits fairs, despite over two-thirds (67 per cent) believing pension presentations could be "quite effective" to help employees.

The survey also found that around 40 per cent of organisations now have an environmental, social and governance (ESG) policy in place, yet just over a quarter (28 per cent) apply this policy to pensions too.

Commenting on the findings, Gallagher Employee Benefits Consulting Division CEO, Nick Burns, said: “The pandemic has prompted a mass shift in working habits and companies are beginning to reflect this accordingly when it comes to their benefits strategy.

“This will be an ongoing process as in 2022 we can see that benefit redesign is very much on the agenda.

“Benefits are of course just a part of the jigsaw puzzle to the wider employee experience and how getting that right will help with talent retention and organisational culture.”

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