Governments everywhere are trying to nudge people to save more through various incentives such as tax-exempt pension contributions and structures such as automatic pension accounts (though in most cases members can opt-out). But what about employers? What is their view on providing pensions and, in particular, auto-enrolment plans? One would think that employers’ self-interest would tend to push them away from any mandate to provide retirement savings mechanisms and responsibility to collect and remit deductions from payroll.

Well, some data just came in and it appears that in the UK at least, employers think it is a good idea to provide retirement savings accounts and in fact expand their availability. A recent survey conducted by CBI (Confederation of British Industry) and Scottish Widows found wide support for auto-enrolment plans and a desire to extend enrolment to more workers. In the UK, an auto-enrolment framework for worker pension accounts was phased in between 2012-2016, where each employer was required to set up a plan with payroll deductions and automatically enrol each worker. However, workers are exempt from auto-enrolment if they earn less than GBP-10,000 or if they are self-employed contract workers.

In the “Future Savings” survey of 240 employers, 74% wanted to eliminate or reduce the GBP-10,000 earnings trigger and to also make pension accounts available to self-employed workers. As well, 71% of the companies think that employers need to make more contributions to workers’ pension accounts to help them provide needed retirement income.

Because the auto-enrolment scheme was just recently introduced, the CBI/Scottish Widows survey also asked if company leadership supported employer-provided workplace pensions. Ninety-eight percent agreed there is a business case to do so, and 95% agreed there is a moral case.

In Canada, meanwhile, Québec is the only provincial jurisdiction to mandate workplace pension plans. Starting in 2014, employers without other pension vehicles were required to enrol in the VRSP (Voluntary Retirement Savings Plans) program. The VRSP is a variant of the PRPP (Pooled Registered Pension Plans). Administration and fund management of PRPPs and VRSPs is outsourced to the financial institutions that provide the plans, so individual employers don’t get bogged down with running pension plans.

Meanwhile, other countries also have mandatory pension plans for workers. For example, in 2004 Nigeria launched a national contributory scheme for employers with three or more workers. Perhaps the UK and Québec thought this was a good idea and therefore followed suit a few years later. What about the other Canadian provinces or other countries?

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