Small businesses support workplace pension for low-earning employees

Under current regulations, employees earning less than £10,000 a year are excluded from the auto-enrolment process

51% of UK small businesses would support a change of rules that would see low-earning employees become eligible for a workplace pension, according to a new study by YouGov.

The survey of 398 small and medium-sized enterprises revealed that the majority would favour auto-enrolling employees who earn less than £10,000 annually – with said workers currently excluded from the auto-enrolment process.

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37% of respondents said they are already paying above the minimum contribution of 1%, with 60% believing that auto-enrolment should be applied to all staff – despite the extra costs this would inevitably occur.

While the cut-off point of £10,000 will remain as such until at least 2017/2018, it’s suggested such a change in regulation would mostly affect part-time workers, particularly women, who are more likely to miss out on an employer pension contribution.

More than seven million workers have been automatically enrolled into a workplace pension since the process started with larger businesses in 2012, with contributions from both employee and employer standing at a combined 2%, but set to rise to 8% by 2019.

Darren Philp, director of policy and market engagement with The People’s Pension, said:

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“Small businesses are supportive of lower earners being brought into automatic enrolment. Their current exclusion affects part-time workers, more likely to be women, and their inclusion could over time go some way towards tackling some of the inequalities we have in our pensions system.”

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