SMEs ‘must do more’ to boost pension participation

Small- and medium-sized enterprises (SME) need to do more to boost pension participation levels amongst their staff, Broadstone has warned.

Its analysis of Department for Work and Pensions (DWP) statistics highlighted that more than a million workers in SMEs are not saving into a workplace pension.

An estimated 803,000, or one in five, employees in companies with between five and 49 people are not contributing into a workplace pension.

This is the second successive year that a fifth of workers for employers of this size have not been contributing, which Broadstone said suggested that, despite the initial success of auto-enrolment, there is still a sizeable proportion of non-savers who need greater encouragement.

Furthermore, 12 per cent of workers at businesses with 50-249 people are also not participating, equivalent to 374,000 people.

Workplace pension participation rates at larger companies was found to be much higher, with under one in 10 employees at businesses with more than 250 people not contributing to a workplace pension.

Broadstone noted that while some people may be contributing to a personal pension, which is not counted in this data, this is typically a small proportion of people.

Data from the DWP showed that, in total, employers in the private sector contributed £37.5bn, with employees benefitting from a further £7bn through tax relief.

“Workplace pensions are a fantastic way for workers to save in a tax-efficient way and even get free money from their employers and the government,” said Broadstone head of pensions and savings, Rachel Meadows.

“However, it is clear that employees at smaller organisations are falling through the cracks at a greater rate than among larger employers. This is perhaps because these businesses are less likely to have a plan in place to communicate the need to start accumulating pension savings for later-life.

“Boosting pension participation among colleagues is a key duty of employers in a post auto-enrolment environment as it is critical to protecting the long-term financial future of their colleagues. There is a benefit for smaller businesses too – it helps them attract and retain talent if workers know their employer is achieving best-practise standards in line with bigger organisations.

“Employers should be taking steps to increase communications and provide sources of guidance on the benefits of pension saving to make clear the responsibilities individual pension savers bear as well as the vast financial contribution that employers and the government will also make. With pensions being one of the biggest employee benefit costs for most employers, allocating a small extra spend on boosting staff knowledge can reap a big reward.

“This is the key to improving understanding, and therefore engagement and participation, among employees and ultimately aligning participation rates with larger employers.”

    Share Story:

Recent Stories


Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

ESG & DC – creating the right tools
In the latest of our series of Pensions Age video interviews Francesca Fabrizi, Editor in Chief of Pensions Age is joined by Manuela Sperandeo, Head of Sustainable Indexing EMEA, BlackRock and Mark Guirey, Executive Director, Asset Owner and Consultant Coverage - MSCI to discuss some key trends of ESG investing among UK pension funds today. Please click here for an edited write-up of the video

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Global sustainable credit
Laura Blows speaks to Royal London Asset Management senior fund manager, Rachid Semaoune, about global sustainable credit
Global equities and transition investing
Pensions Age editor, Laura Blows speaks to Royal London Asset Management equity investment director, Jonathan Price, about transitioning to sustainable investments within global equities

Advertisement Advertisement Advertisement