U.K. executives that oversee defined contribution plans think the government should increase mandatory contribution rates and did not change their approach to running their plans as a result of the coronavirus pandemic.
A joint survey by Mercer and the Confederation of British Industry, which represents U.K. businesses, also showed that although businesses support an expansion of automatic enrollment, a significant minority currently can't afford higher minimum contribution levels.
The survey was conducted between June 7 and June 25, among 350 pension fund managers and senior executives, who are responsible for U.K. retirement plans.
Three-quarters of the survey respondents looked after a DC plan, while 31% of them managed a defined benefit fund alongside a DC plan.
Almost half, or 48% of respondents, managed a DC plan with less than £10 million ($13.5 million) in assets, and more than 41% of them managed a DB fund with more than £1 billion in assets.
Three-quarters of senior executives who responded to the survey believe higher contribution rates above the current mandatory 8% of the combined employer and employee rate will be needed in the future to ensure that workers end up with sufficient retirement income.
Some 65% of senior executives said when businesses can, they should pay more than the minimum rate to support their employees in retirement. Also, 62% of the surveyed senior executives would also like to see a contribution increase in the next five years.
At the same time 35% of respondents do not think that government should increase the statutory minimum contribution paid by employers at all in the next five years.
More than 90% businesses that experienced a negative impact on their cash flow due to COVID-19 have not changed their approach to their DC plan or reduced their contributions as a result, the survey showed.
