The increase in auto-enrolment minimum pension contributions had a minimum effect on small and medium employers, according to data from The Pensions Regulator (TPR)
More than 90 per cent of these firms said that none of their staff asked to leave the pension scheme when contributions were increased, in research that polled 300 micro, 300 small and 200 medium employers.
Among micro and small employers, 2 per cent and 5 per cent respectively reported that any members had asked to leave their scheme. This proportion increased to 17 per cent among medium employers.
These figures are in line with the experience of other pension providers, such as Now: Pensions.
Auto-enrolment minimum pension contributions increased in April, from 2 per cent to 5 per cent. In 2019 they will increase again to 8 per cent, with the employee paying 5 per cent.
Cessation data – which was analysed in this research - is different from opting-out, a six-week window when a member is first auto-enrolled in the scheme and has the choice to leave and get all his contributions back, which is monitored by The Pensions Regulator.
Until now, the only data regarding cessation rates – when members decide to stop saving and leave their scheme – was revealed in the government's auto-enrolment review, published in December and showed 16 per cent of savers ceased their contributions.
The employers surveyed by The Pensions Regulator were also asked if any members had asked to remain in the scheme but not pay the new contribution levels.
FTAdviser reported in March that there is a loophole in current legislation that allows a jobholder to “continue membership at a lower rate”.
However, if a member chooses to "reduce their contributions to below the statutory minimum level, the scheme will no longer be qualifying for them".
This means the employer is no longer obligated by law to make contributions for that employee's pension pot.
This request occurred rarely, with 1 per cent of micro, 1 per cent of small and 2 per cent of medium employers reporting staff opting to keep their contributions at the original rate. This equated to nine of the 800 employers interviewed.
Of these, four indicated they were able to meet this request under their pension scheme. Each of these four employers reported that a single member took up this option.
The regulator's research also showed that 47 per cent of medium-sized employers are paying at least some of their staff more than the minimum employer contribution - with 25 per cent and 22 per cent of small and micro bosses respectively paying more than the minimum.
Most employers were aware that pension contributions would increase again in April 2019 (64 per cent of micro, 83 per cent of small and 96 per cent of medium), and awareness was greater than in the previous surveys.
Knowledge of the date and amount of the first increase had also improved, the regulator added.
Darren Ryder, director of automatic enrolment at The Pensions Regulator, said: "It is great news that employers are continuing to find their ongoing duties quick and easy to do, staff are saving more and we are continuing to build on the success of automatic enrolment."
maria.espadinha@ft.com
