Human resource initiatives are being delayed because of pensions auto-enrolment, according to Vicky Wright, immediate past president of the Chartered Institute of Personnel and Development (CIPD).
Speaking at the National Association of Pension Funds’ annual conference this week, Wright (pictured) said: “The technicalities of auto-enrolment have used up an awful lot of resource. Even when you have got providers helping you. So what we have had is this delay in HR initiatives going on, particularly in the reward space.”
She explained that HR departments have had to put a lot of effort into auto-enrolment. “For example, in the RNLI where we pay some call out allowances to people who are otherwise volunteers [saving people’s lives at sea], it [can happen] very frequently over a short period of time. And you just sit there and think ‘Oh, my goodness, I hope auto-enrolment isn’t going to make a mess of this’.”
However, she believes that in the longer term the interesting question is what auto-enrolment participation rates will be.
“I know we have had the initial good start but that is primarily among larger organisations which have been much better equipped. We just do not know what it is going to look like for smaller employers,” she said.
“I do have some organisations which have got concerns about the increase in costs.”
But, as she pointed out: “We are in an environment where pay levels are not running away either. You have got to put it in context.
“My sense with auto-enrolment is that it has raised the profile of the discussion then you are going to see other discussions.”
For example, in one of the organisations she works with, one of the things that has come to the fore is life cover as a benefit.
“Because we have always have life cover linked to the pension scheme, if [an employee] didn’t participate in the pension scheme they now had no life cover. And some of these people are saying, ‘Now hold on a minute I want that’. And you are sitting there thinking ‘how can we deal with that?’.
Wright believes we are going through a transition phase. “Certainly it is the CIPD’s thinking that, because we have got this going on there is much more interest in how people are running their benefits. Getting effective benefits packages in place; I think auto-enrolment has just helped that in some way.”
“But we won’t get there until we get over the massive hump of auto-enrolment.”