Are you ready for auto-enrolment?

Morten Nilsson

Auto-enrolment pension schemes may be great for the future health of the country’s economy, but it’s easy to see how retailers view the scheme as another regulatory burden they must bear the weight of. But it’s a scheme well worth making the most of, for you and your staff.

by Morten Nilsson


With over 1.2 million small and micro firms yet to tackle auto enrolment, the number of employers in the retail sector planning on contributing more than the legislative minimum has risen sharply in the past year.

Of the 400 SMEs surveyed on behalf of NOW: Pensions, 42% of firms in the retail sector say they plan to, or will consider, contributing more than the legislative minimum when they enrol their employees into a workplace pension. This compares to 10% of SMEs in the retail sector surveyed last year.

The perception is that large firms offer more generous pensions than small companies but, this isn’t necessarily true. Many small employers in the retail sector want to offer their staff a benefit they’ll genuinely value and are willing to put their hand in their pocket to do so.

Of those that intend to be more generous, 24% say they plan to pay more than the minimum from the outset with a further 18% stating that they will pay the minimum initially, with a view to increasing contributions over time. This is an improvement on 2014 when just 5% of SMEs in the retail sector surveyed said they intended to pay more than the minimum with a further 5% stating they will pay the minimum initially with a view to increasing contributions over time.

Over two thirds (68%) of those surveyed in the retail sector who intend to pay more than the minimum say they believe it will help with the recruitment and retention of employees. Half of those surveyed hope that by contributing more, their employees will be encouraged to do the same while over a third (38%) think the minimum contribution has been set too low for a comfortable retirement. A quarter (25%) say they don’t offer any other benefits so are happy to spend a bit more on providing a more generous pension while an equal proportion believe it is the employer’s responsibility to ensure employees have a healthy pension pot that will provide them with a comfortable retirement.

Of all the companies surveyed in the retail sector, nearly a third (31%) say they think offering a good quality pension helps with employee retention while a quarter (26%) think it helps to improve the attractiveness of the company to potential employees.

Of the 40% of firms in the retail sector that plan to make minimum contributions, 47% claim they want to keep things simple and think paying more would complicate matters, while 25% say keeping costs low is a priority. A further 23% say it is because their focus is on ensuring compliance while an honest 18% say they don’t really want to offer a pension at all so plan to keep costs as low as possible.

There’s a danger that, because the government has set the contribution level, employers will assume that auto enrolment minimum contributions are sufficient to provide a comfortable retirement for their workforce.

The reality is that even when auto enrolment is fully rolled out, a combined pension contribution of 8% still isn’t going to be enough for most people. If employers contribute even a small amount more than they are obliged to do, this can make a big difference to employees’ final pension pots.

Morten Nilsson is CEO of Now: Pensions, a company that offers employers a choice of five standard auto enrolment contribution models. The models are designed to cater for all requirements, from those who want to comply with the legislation at minimum cost to those who want to offer their employees an enhanced benefit.