Majority of employers aware of auto-enrolment

The majority (88%) of respondents to research by the Chartered Institute of Personnel and Development (CIPD) are aware of their requirements to auto-enrol staff into a pension scheme.

Its Labour market outlook: Focus on pension auto-enrolment, which surveyed more than 1,000 employers, found that more than half (59%) of respondents have actually conducted reviews to ensure that their pension arrangements support the legal requirements of auto-enrolment, while 51% of those that are aware of the legislation have looked beyond legal compliance and taken steps to ensure their pension arrangements meet the needs of both the business and employees.

Nearly half (49%) said auto-enrolment will have no impact on their organisation. Where respondents predicted that auto-enrolment will impact the business, it was expected that this would be in the form of lower wage growth (21%), a reduction in other elements of pay, such as bonus or overtime payments (18%), cuts to non-pension benefits (15%), and no wage growth (13%).

A quarter (26%) have already started to collect data to measure and evaluate the impact, while 20% have no intention of doing so.

The research also found:

  • 50% of respondents predicted that their current offering will not change in value after the introduction of auto-enrolment.
  • 9% predicted that they will cut their pensions offering, while 22% reported that their pension offering will increase as a result of auto-enrolment.
  • 44% of respondents have reviewed their HR, payroll and pension administration systems.
  • 43% have examined the way that they communicate to employees about pensions.
  • 23% of respondents do not know whether their organisation has costed the impact of auto-enrolment. 

Charles Cotton, rewards adviser at the CIPD, said: “Given that the cost of pensions is a major business outlay for most employers, it is somewhat disappointing that so few have started collecting data to assess the impact that these reforms may have.

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“Some organisations may feel forced to offset some of the additional costs by reducing wage growth or cutting other benefits, but it is important that employers examine how they can turn these costs into an investment that will bring a return to the organisation in the form of higher employee engagement, as well as aligning their pension scheme with the organisation’s business strategy, brand and culture.

“Our survey reveals that, while much has already been done in this regard, employers still need to do more.”