UK - Employers in the UK could end up only offering the legally required minimum contribution rate once auto-enrolment reforms come into force, new research by the Pensions Policy Institute (PPI) indicates.

Examining contribution and opt-out rates in New Zealand - the only other country with auto-enrolment, introduced in 2007 - the PPI found that the overwhelming majority of employers, as well as employees, were only opting to contribute the minimum towards their KiwiSaver account.

The research noted that 91% of employers opted for the lowest possible contribution rate of 2% of salary, while 62% of employees joining before reforms in 2009 only paid the legal minimum of 4% towards their pension.

Following the 2009 reform - which allowed new members a reduced minimum contribution of 2% - 80% of new joiners decided to pay the legal minimum only.

The paper by Leandro Carrera said: “The NZ experience illustrates that employees and employers tend to make contributions at the legal minimum.”

It continued that it would be “hard to predict” how contribution patterns would be shaped here, with many commentators previously warning about the threat of levelling down.

It added: “The NZ experience shows that awareness must be raised about the need to increase contribution levels to achieve some individuals’ desired replacement rates.”

Carrera also noted that while the overall replacement rate in New Zealand was higher, reaching 55% of pre-retirement earnings, more than 70% of that was a result of the country’s state pension.

In the UK, a median earner could expect a third of his 45% of pre-retirement salary to come from his private pension savings.

Regardless, both countries still fall below the OECD’s recommended replacement level of 65%, which previous estimates have said would require a total contribution of 16% of earnings - with UK minimum contributions under auto-enrolment currently set at 8%.

In other news, Hymans Robertson has been appointed as consultant to Michelin UK’s Pension and Life Assurance Plan.

Chris Wood, chairman of the trustees at the defined contribution scheme, said the consultancy had helped them understand member attitudes better.

“They will also be supporting us in developing a comprehensive new communications strategy, using a range of media, which will build directly on the feedback from the recent member focus groups,” he said.

Rona Train at Hymans Robertson added: “The trustees understand the need to offer appropriate fund choices, based on their members’ needs, and we are now helping them with a communications strategy that should genuinely help their members to make better decisions when planning for their retirement.”

Finally, LCP has been appointed as investment adviser to the University of Oxford’s £325m (€391m) staff pension scheme.