Auto-Enrolment Pension Uptake Could Hit 82%
New findings by the Chartered Institute of Personnel and Development (CIPD) have revealed some encouraging positives regarding the new auto-enrolment pensions.
In the CIPD report, Labour Market Outlook – Focus on pension auto-enrolment (PDF) the findings show that, of the 1,000 employers polled, as much as 88% are fully aware of their requirements to ensure their staff are auto-enrolled into a staff pension scheme.
However, 51% of employers have still done nothing to make sure their pension arrangements are suited to both their business and their employees.
The CIPD also questioned 2,000 employees about their attitudes towards the new auto-enrolment pensions and 62% of those quizzed, who said they had no workplace pension scheme, said they would be happy to stay opted-in to the scheme once in.
Scaling this figure to reflect the wider workforce, the CIPD believes that as many as 82% of the UK workforce could then be automatically contributing into a workplace pension scheme. The current level of uptake is 52%
Impact or No Impact?
The Labour Market Outlook also highlighted that 49% of employers questioned believed that the new auto-enrolment pensions would have absolutely no impact on their organisations.
The remaining 51% of employers believed that there would be an impact on wage growth and possibly on their reward systems.
When the CIPD looked at how many firms were actively collecting data in order to evaluate the possible impact of auto-enrolment a little over a quarter (26%) of the businesses were doing so.
More worryingly, 20% of businesses said they had no intention of looking at the impact of auto-enrolment upon their operations.
Charles Cotton of the CIPD said that, considering pensions schemes were such a major business outlay for firms, he was "somewhat disappointed" with the attitude of employers who would not be assessing the affect of the upcoming reforms.
"Some organisations may feel forced to offset some of the additional costs by reducing wage growth or cutting other benefits," said Cotton, "but it is important that employers examine how they can turn these costs into an investment that will bring a return to the organisation in the form of higher employee engagement, as well as aligning their pension scheme with the organisation’s business strategy, brand and culture. Our survey reveals that while much has already been done in this regard employers still need to do more."
Cotton was also concerned at firms’ lack of understanding about what they were actually doing to assess how auto-enrolment pensions would be implemented in their businesses, saying:
"Getting it wrong doesn’t just mean getting into trouble with the Pensions Regulator. Large employers should treat the exercise as an organisational change project and set up cross-functional teams to implement the changes."
The CIPD spokesman acknowledged that it wasn’t just medium-sized firms who would need to look at auto-enrolment with more seriousness. Small businesses too had their own issues, especially, considering their size, they often didn’t have the support of an HR team or department.
The business advice to SMEs is that they should share their experiences of the auto-enrolment pension scheme implementation so that other small and medium-sized firms can benefit from their practices.
The CIPD, in partnership with big four accountants KPMG, have produced a dedicated resource for businesses wishing to look further into the auto-enrolment pension situation http://www.cipd.co.uk/hr-resources/kpmg/
Auto-enrolment came into effect from the 1st October but is being rolled out over the next 5 years. You can find your business’s "staging date" at the Pensions Regulator website.