The average FTSE 250 employer contribution rate into defined contribution pension schemes has risen by 40 per cent year-on-year, from 4.3 per cent to 6.1 per cent.

Contributions from companies in the FTSE 100 also increased, from 6.4 per cent in 2018 to 7.1 per cent in 2019, the highest average rate on record.

In its annual FTSE 350 DC Pension Scheme Survey, Willis Towers Watson (WTW) revealed that employee contributions had seen similar increases.

The average maximum employer and employee combined contributions for FTSE 250 firms increased to a record 14.8 per cent, while in the FTSE 100 this figure reached 17.4 per cent.

WTW theorised that auto-enrolment had driven companies to review their pension schemes.

“Contribution rates seemed to have settled over recent years, but 2019 has seen a marked increase for UK DC schemes,” said WTW senior director, Richard Sweetman.

“It’s encouraging that these employers have sought to reassess and take action on their contribution levels and the scheme’s offering as a whole, likely given impetus by the final step-up of minimum auto enrolment contribution rates in April 2019.”

The firm found that 62 per cent of FTSE 250 companies had taken action on their workplace scheme in the past two years with 33 per cent considering action in the next two.

Slightly fewer FTSE 100 schemes were reviewed, with 48 per cent taking action and 33 per cent looking to in the next two years.

Its survey also revealed that DC master trusts were becoming more popular, with 21 per cent of FTSE 100 firms using them, up from 15 per cent last year, although in the FTSE 250 the number remained stable at around a fifth.

Companies with master trusts were more likely to take action on their contribution rates, with 67 per cent of master trusts updating their scheme in the past two years.

Sweetman added: “Those companies who are making the move to master trusts are, perhaps unsurprisingly, the most engaged in making their pensions as efficient and effective as possible, and are taking the opportunity to review contribution design.”

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