Research from workplace pensions provider NOW: Pensions shows that the number of employers in the construction sector planning on contributing more than the legislative minimum has increased significantly in the past year.
Of the 400 SMEs surveyed, 42% of firms in the construction sector say they plan to, or will consider, contributing more than the legislative minimum when they enrol their employees into a workplace pension.
This compares to 24% of SMEs in the construction sector surveyed last year.
Of those that intend to be more generous, 15% say they plan to pay more than the minimum from the outset with a further 14% stating that they will pay the minimum initially, with a view to increasing contributions over time.
This is an improvement on 2014 when just 1% of SMEs in the construction sector surveyed said they intended to pay more than the minimum with a further 23% stating they will pay the minimum initially with a view to increasing contributions over time.
Nearly half (46%) think the minimum contribution has been set too low for a comfortable retirement while 44% hope that by contributing more, their employees will be encouraged to do the same.
Nearly a third (35%) of those surveyed in the construction sector who intend to pay more than the minimum say they believe it will help with the recruitment and retention of employees.
One in five (22%) say they don’t offer any other benefits so are happy to spend a bit more on providing a more generous pension while 20% think the cost of a larger contribution is small compared to the long term benefit it will provide.
Of all the companies surveyed in the construction sector, 36% say they think offering a good quality pension helps with employee retention while 32% think it helps to improve the attractiveness of the company to potential employees.
NOW: Pensions CEO Morten Nilsson said: “The perception is that large firms offer more generous pensions than small companies but, this isn’t necessarily true. Many small employers in the construction sector want to offer their staff a benefit they’ll genuinely value and are willing to put their hand in their pocket to do so.”
Of the 43% of firms in the construction sector that plan to make minimum contributions, over half (57%) say it is because their focus is on ensuring compliance while 43% claim they want to keep things simple and think paying more would complicate matters.
A further 14% say keeping costs low is a priority while an honest 9% say they don’t really want to offer a pension at all so plan to keep costs as low as possible.
Mr Nilsson continues: “There’s a danger that, because the government has set the contribution level, employers will assume that auto enrolment minimum contributions are sufficient to provide a comfortable retirement for their workforce.
“The reality is that even when auto enrolment is fully rolled out, a combined pension contribution of 8% still isn’t going to be enough for most people. If employers contribute even a small amount more than they are obliged to do, this can make a big difference to employees’ final pension pots.”