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Two-thirds of employees now in workplace pension schemes

Two-thirds (66%) of employees are now saving through a workplace pension scheme, according to the CIPD

Employee Outlook: Focus on employee attitudes to pay and pensions found that those aged 18 to 24 are the least likely to be in a pension scheme (36%), and those aged 35 to 44 are most likely to be in one (77%). By region, Welsh workers are less likely (59%) while those in the north-east of England are more likely (84%) to be in a workplace pension plan.

Just under two-fifths (37%) of respondents work for an employer that offers to increase the contributions it makes to an employee’s pension if the employee increases their own contribution. Such schemes have an impact, with 66% reporting that it encourages them to pay in more and 41% making the maximum contribution to get the highest employer contribution possible.

Charles Cotton, CIPD performance and reward adviser, said that while many pension commentators have suggested that workers and firms are not paying in enough to workplace defined contribution schemes, the research shows that most employers and employees are contributing well in excess of the minimum rates required under auto-enrolment.

“However, employers are clearly taking a hit and this is likely to become more of a problem as the introduction of the National Living Wage in April and the apprenticeship levy in 2017 edge closer,” he added.

Cotton also expressed concern over how pension contributions will be taxed in future. “Taxing pension contributions or introducing a single rate of tax relief would result in a significant administration and cost headache for many employers,” he said.

“If changes have to be made then they should come in after 2018 as auto-enrolment will be complete and organisations will have had time to measure and respond to the impact of these other new initiatives. Employers need to be protected too, so for the moment it’s better to stabilise rather than rush through changes that will put unnecessary strain on many firms.”