Pensions  

Auto-enrolment demand soon ‘to rise by 3,500%’

Auto-enrolment demand soon ‘to rise by 3,500%’

The number of employers going through auto-enrolment each day will go up by 3,500 per cent during the next stage of the process.

Helen Dean, chief executive of Nest, said that over the past three years an average of 58 employers enrolling each day will go up to an average of 2,000 a day between now and 2018. And a large proportion of those businesses will seek help from an accountant rather than an IFA.

Ms Dean said: “Having only had only 4 per cent of employers meet their duties so far, there are going to be 35 times as many employers staging in the coming years.

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“This is when the business world will really get to grips with auto-enrolment. The pension industry needs to have developed automated propositions that can work at high capacity.

“Intermediaries continue to have a critical role to play.”

Around 64,000 employers have met their auto-enrolment duties but there are a further 1.8m which have to set up a scheme between now and 2018.

Nest in numbers

Nest has approximately 2.4m members.

Its average opt-out rate is 8 per cent.

29,000 employers are signed up with Nest, plus more than 1,000 self-employed members.

Nest looks after more than £565m on behalf of its members.

Ms Dean said the next stage of auto-enrolment would be challenging because smaller businesses are less likely to have experience of offering a pension scheme.

Research by Nest found that only 26 per cent of small and micro employers offer a pension scheme, while 54 per cent of businesses with five to 49 employees say they only have an “informal approach” towards communicating with their workers about HR, benefits and pensions.

Nest’s research suggests that 74 per cent of small and micro businesses will seek external support for auto-enrolment but the majority – 54 per cent – will turn to an accountant rather than an IFA, which accounts for only 14 per cent.

Adviser view

Tom Binstead, corporate director of Cheltenham-based Bank House Group, said: “If people have taken enough time to prepare, then auto-enrolment should be fine, but the companies that scramble around at the end will struggle.”