Should an Automatic Enrolment Pension Scheme with Minimum Government Contributions be called an Employee Benefit?

04 Apr 2024

I have recently read HR articles discussing whether a pension scheme with government minimum pension contributions should really be called an Employee Benefit or is it just a company meeting its legal requirement?
In my view, in today’s economic landscape where financial security during retirement is a growing concern, automatic enrolment pension schemes are the start of building financial security. The aim is to encourage individuals to save for their retirement by automatically enrolling them into pension plans. While some might argue that merely meeting the government’s minimum contribution requirements is just a company meeting its regulatory requirements, I believe automatic enrolment pensions with minimum contributions are still a real benefit to the working population.
I believe it is crucial to understand the significance of automatic enrolment itself. Past studies have consistently shown that inertia plays a significant role in people’s reluctance to save for retirement. Many individuals simply don’t prioritise setting up pension plans or contributing to them regularly. Automatic enrolment eliminates this inertia. This small nudge makes sure people are saving for their future.
I also feel it is important to consider that even though the minimum government contribution might seem modest, it serves as a foundation for retirement savings. For many individuals, especially those with lower incomes or precarious financial situations, even a small contribution can accumulate over time and provide a meaningful supplement to their retirement income. It is essential to recognise that every pound saved today can help bolster an individual financial security in retirement. Employer contributions to these schemes, significantly boosts retirement savings.
While the government’s minimum contribution ensures basic participation, companies and individuals can choose to increase their contributions and individuals can adjust their investment portfolios according to their preferences, thereby maximising the potential growth of their retirement savings, providing greater retirement security.
In conclusion, I see automatic enrolment pensions with minimum contributions as serving a valuable tool in promoting financial security and well-being in retirement and should be called an Employee Benefit.
Wingate Benefit Solutions are about to release their latest Employee Benefit Benchmarking report where we review current pension trends for companies. If you would like to receive a copy and no obligation call, please contact us on or phone on 01883 332260

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Employee Benefit Benchmarking Report 2022

Exclusively focused on UK organisations with employee headcounts of up to 1000, the data and conclusions shared in this report are directly relevant to companies of this size and profile.