Employers are not prepared for auto-enrolment

Only a small proportion of employers have taken steps to prepare for auto-enrolling employees into a workplace pension which they will be required to do from 2012, according to research conducted by Mercer.

The employee benefit consultancy’s survey of trustees, pensions managers and pension administrators showed that less than a third said they were progressing well with their preparations, while more than two-thirds have either not yet begun or only just started.

The estimated costs of implementing the new processes and communications for auto-enrolment vary widely amongst the organisations surveyed, with one in three believing the costs will be between £5,000 and £20,000 and a similar number estimating them between £20,000 and £50,000.

Opinion is divided on who should take responsibility for managing the auto-enrolment process, with a third of respondents indicating that they expect their scheme administrator to be responsible. Another third will look to their HR dept, while most of the remainder believe management responsibility should be shared between their payroll team, HR and scheme administrator.

Geraldine Brassett, a principal in Mercer’s outsourcing business, said: “The problem is that many employers are unaware of the complexity and detailed implications of the changes that lie ahead. 2012 may still sound like a long way off, but unless they start to prepare soon, many companies may find themselves repeating the experience of A-Day and rushing to meet their deadline.

“The reasons employers commonly give for holding back are that they have not yet agreed their pension strategy or are awaiting the outcome of the election in case circumstances change. Others believe they have no action to take as they already operate auto-enrolment under their existing pension arrangements.”

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