Almost all (98%) respondents are aware of pensions auto-enrolment, compared to the 20% who said the same in 2011, according to research by the Institute of Directors (IOD).
Its research, which surveyed 1,327 IOD members, found that three-fifths (62%) of respondents said they were confident that they were ready to auto-enrol staff when they hit their staging date.
The level of preparedness varied by size, with 79% of larger employers (250 staff or more) saying they were confident and only 54% of small employers (less than 49 staff) saying this was the case.
In 2011, the IOD found that 36% of respondents thought that more than a third of their staff would choose to opt-out of their workplace pension scheme, but in 2013, only 15% of respondents said the same.
However, uncertainty still remains among small firms, with 36% saying they did not know how many of their staff would choose to opt-out.
When it comes to employer contributions, 42% of respondents believe they will have to meet these requirements out of their own profits. A fifth (21%) said they will have to freeze or cut salaries to find the money, and 3% said they will be forced to make redundancies.
Malcolm Small, senior pensions policy adviser at the Institute of Directors (pictured), said: “Auto-enrolment is a new challenge for business, both in terms of costs and logistics.
“It’s positive that nearly all [respondents] know that they will have to set up a pension scheme for staff over the next few years, and that most feel ready for it.
“However, we still don’t know how small firms are going to handle the burden. Nearly half still feel unsure about the process, and many don’t know if their staff are going to drop out.”
The research shows there is considerable disenchantment with government policies affecting pensions. Members are apparently critical of what they see as attempts to limit the potential benefits of pension saving.
The pensions system attracted a series of unflattering descriptions, including: ‘a mess’, ‘a fraud’, ‘a farce’, ‘a rip-off’ and ‘a confidence trick’ to name a few examples. Current annuity rates were described as ‘crucifying’, ‘pathetic’ and ‘worth almost nothing’.
Disenchantment was also expressed about progressive lowering of the lifetime allowance, frequent rule changes and lack of flexibility. At least on this latter issue it’s hard to disagree. One director captured the general mood by suggesting the government’s approach was less than joined up. ‘This is contradictory. We want you to save for retirement, but we don’t want you to save too much,’ he said.
The IoD records that the suggestion of wilful compliance with automatic enrolment is something new for 2013 and possibly follows greater awareness among smaller employers of their legal obligations. Let us hope the members concerned are a small minority as the IoD says: ‘We cannot infer from these comments that such attitudes will be widespread, but the research gives a sense that as employers – and particularly small employers – start to comprehend the enormity of the task in front of them, hostility to automatic enrolment might increase.