Pensions Expert has reported that according to investment platform Hargreaves Lansdown, the government should force employers to match voluntary pension contributions made above auto-enrolment minimums.
“The reality is that contributions of 8 per cent of earnings will not deliver an adequate income for a median earner”, said Hargreaves Lansdown – and opposing increasing the 8 per cent minimum rate, also said that the proposal would incentivise “further saving” for individuals that want it.
From 6 April 2019, the total minimum contribution including employer and employee payments must be no less than 8% of qualifying earnings.
Organisations must pay a minimum of 3%, however, it can choose to pay more than the minimum contribution if it wishes. There are employers out there who cover the whole 8% so there are some employees, who don’t have to contribute to their workplace pension at all. However what Hargreaves Lansdown are advocating is that if an employee contributes more than the minimum 5%, then the employer should be forced to at least match it.
“Our position is that the bedrock that you get from auto-enrolment should see most people in a pretty decent place when they come to retirement,” said senior analyst at Hargreaves, Nathan Long. “If there is still need to provide any further incentive then it should be to offer matching on top.”