12 November 2009 – Publication of DWP research report No. 617: Understanding Small Employers’ likely Responses to the Workplace Pension Reforms: Report of a Qualitative Study

Today, the Department for Work and Pensions publishes the findings of research exploring small employers’ likely responses to the workplace pension reforms set out in the 2008 Pensions Act.

The main findings are:

• The idea of a ‘saving culture’ in which people take responsibility for saving for the future and do not rely heavily on credit was highly regarded by all employers.
• Although there was broad support for the general aims of the reforms, the economic climate at the time of the fieldwork meant that small employers were concerned about an increase to the cost of their businesses. This was apparent even among those employers that currently provided a company pension scheme and especially apparent among those providers with low participation rates.
• Employers found it difficult to estimate the cost of each administrative stage required to implement the reforms. This was partly due to a lack of understanding of the detail of the reforms and partly due to the way some small employers outsource their administration.
• However, respondents reported that previous government initiatives, such as National Minimum Wage and online tax returns, had been easy to implement as a result of straight forward communication from Government. They also noted that they had absorbed the costs of previous reforms without significant impact.
• Employers did not hold strong views on phasing, those who were not already contributing to a pension thought it was a good idea which would “soften the blow” of contribution costs. However, those already contributing to pensions felt that a 3% contribution at the outset would be less confusing and reduce administration.
• Employers typically said they would prefer the contribution rate changes in phasing to occur in April, in line with the financial year.

Notes to Editors

1. DWP Research Report No. [617]– "Understanding small employers’ likely responses to the 2012 workplace pension reforms: Qualitative research with Small Employers" is published on 12th November 2009 by Corporate Document Services. The research was conducted on behalf of DWP by Andrew Thomas at BMRB.
2. Free summaries are available from Paul Noakes at the DWP Social Research Branch (3rd Floor, 3rd Floor, Caxton House, Tothill Street, London SW1H 9NA.). The reports and summaries are available free on the DWP website http://www.dwp.gov.uk/asd/asd5
3. The research involved 8 focus groups followed up with 28 in-depth interviews. Respondents were employers from a range of sectors with less than 50 employees.
4. Fieldwork took place between January and February 2009. The research was carried out on behalf of the Department for Work and Pensions (DWP) by BMRB Ltd.

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