Most employers not ready for auto-enrolment
Pension specialist Punter Southall has warned that UK employers were on autopilot and underprepared for pension reform.
Alan Morahan, principal of Punter Southall Direct Contribution Consulting, said the fourth annual survey of DC schemes found employers have failed to take the right steps to assess the true cost of auto-enrolment.
The survey found that 55 per cent believed their current contribution structure met regulatory minimum requirements, but according to the firm’s findings it still falls short.
Only 45 per cent of companies can pinpoint the date when they will have to comply with the new duties, even though they were surveyed before the government’s decision to put back the staging date for small and medium-sized employers.
Mr Morahan said: “It is alarming that companies believe they are prepared. Our findings suggest they are not as far down the line as they should be. These are responsible and committed employers but this is complex new territory and our research indicates they need support to navigate a course that is suitable for employer and employee.
“Employers need to be hands-on, not on autopilot. They know it is coming, but do they know how to adjust their contribution model, their communications and their understanding of the regulations to ensure they have in place something that is robust, resilient and fit for purpose?”
The research also found that 5 per cent of employers intended to investigate using the state-designed vehicle for auto-enrolment, the National Employment Savings Trust.
This was down from 13 per cent in last year’s survey and comes as the UK-wide awareness-raising campaign is underway.
Mr Morahan said the 2012 survey paints a picture of uncertainty for what has long been billed as one of the biggest upheavals for the pension industry.
Despite extensive media coverage of the challenges facing pension schemes, 70 per cent of employers said members do not ask about the impact this could be having on their own savings.
Malcolm Simpson, principal for Gloucestershire-based Ashley Law Cotswold, said: “I am not surprised by these findings. If 55 per cent believe their current structure meets minimum standards, I expect that less than half do in reality.
“If only 45 per cent can pinpoint the compliance date, there is clearly much to be done. Maybe people doing as little as possible as late as possible or having other priorities right now. Perhaps these businesses need more awareness.
“IFAs could help firms by being proactive in bringing auto-enrolment dates to their attention and planning a course of action before its too late.”
