Rise in employee pension contributions predicted

In addition, 66 per cent of employers think that workers will be more engaged with their retirement savings since the Budget and a similar proportion think that employees now place more value on their DC pension as part of their reward package, according to Towers Watson’s post-Budget DC Pension Strategy survey. 

In fact, many companies are also anticipating an increase in DC pension contributions from employees, with nearly three-quarters expecting employees who are close to retirement to start contributing more towards their pension and one-in-five anticipating younger workers will do the same.

Will Aitken, senior DC consultant at Towers Watson said: “We are already seeing attitudes to DC pensions change significantly since the Budget in March. Many employers are feeling more positive about offering them and are expecting that their employees will feel the same way. 

One of the biggest changes could be the anticipated increase in contributions from employees of all ages as more people feel they have more control of their retirement savings and can see the tax advantages more clearly.”

But one area in which the Budget has not altered attitudes is the employer’s primary objective for providing a contribution to their employees’ DC pensions. Only 16 per cent of the employers said that their objective for contributing to DC schemes was to ensure employees had an adequate income in retirement, whereas 65 per cent wanted to be more market competitive.

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