More than 90 per cent of businesses with 249 or fewer employees which have not reached auto-enrolment staging dates want the process delayed until pending pension flexibility legislation has been completed.
The Association of Consulting Actuaries survey also found that 62 per cent of employers with 10 or more employees are now clear about when they must auto-enrol eligible employees into a workplace pension, but only 46 per cent of those with 9 or fewer employees have identified the date.
David Fairs, chairman of the ACA, commented that there could be some sense in pausing the dates when employers with fewer than 50 employees are due to auto-enrol – namely those due to auto-enrol from 1 June 2015 onwards.
“This would give all of the political parties the opportunity in the run-up to the general election to outline what financial measures they are proposing so the scheduled higher minimum pension contributions from October 2018 do not undermine take-up or, worse still, employment levels.”
The ACA survey gathered responses from 414 smaller employers with 249 or fewer employees. There are over 1.2m of these smaller employers, employing 14.4m people – well over half of the UK’s private sector employees (59 per cent of the total) who generate around a half of all private sector turnover (48 per cent), amounting to £1.6bn per year.
Mr Fairs stated that in a three-year period from the middle of this year, over 1m small employers will have to meet the auto-enrolment challenge, three-quarters with four or fewer employees.
“Yes, it is right that pension provision should be available to employees in even the smallest firms, but with so many pension reforms being squeezed into a short time-frame, it cannot be surprising that smaller employers are calling for a delay in auto-enrolment.
“Aside from the pressures being placed on both pension providers and advisers over such a short timescale, it also has to be remembered that, unlike larger employers who are currently required to pay less than 1 per cent of earnings each, most small employers will have to find 3 per cent of band earnings and their employees 4 per cent within two years of auto-enrolling – at a time when average pay increases are likely to be well below these figures.
The ACA research also showed that where employers have taken a view, ‘face-to-face’ meetings are seen as likely to be the most popular channel for the guidance guarantee, followed by web-based tools and then telephone guidance.
peter.walker@ft.com
