Half of UK employers not assessing impact of auto-enrolment, says CIPD
Tom Newcombe, November 21, 2012
The number of employees enrolled in workplace pensions could increase up to 82%, but only half of employers have taken steps to ensure their pension arrangements meet the needs of the business and employees, according to research from the Chartered Institute of Personnel and Development (CIPD).
The survey published today of more than 1,000 employers across all sectors of the economy found that 88% of employers are fully aware of their requirements to auto-enrol staff into a pension scheme; however, only 51% of those have looked beyond legal compliance and taken steps to ensure their pension arrangements meet the needs of the business and employees.
The CIPD also surveyed more than 2,000 employees and found that 62% of those not saving through a workplace pension plan to stay opted in when they are auto-enrolled. As a consequence, the report claims that if the rest of the UK workforce behaves in a similar fashion to those surveyed, the overall percentage of those in a workplace pension could increase from 52% to 82%.
The report Labour Market Outlook: Focus on pension auto-enrolment, has revealed that employers are divided when it comes to the likely impact of auto-enrolment on their organisations: 49% predict it will have no impact, with the remainder predicting it may impact on wage growth and other elements of the reward mix.
The report does claim that only 26% of organisations have started to collect data to measure and evaluate the impact, while 20% have no intention of doing so.
Charles Cotton, CIPD rewards adviser, said: "It looks likely that automatic pension enrolment will significantly boost the numbers of employees saving for their retirement.
"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."
Cotton added: "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."
Andy Seed, pensions director at auditor KPMG UK, said: "Auto-enrolment is 10% a pensions problem and 90% a systems, process, IT, communications, HR policy and governance issue.
"The intent and spirit of the legislation is admirable, but there are huge challenges for businesses in getting it right."
He added: "It's a business imperative that these non-pensions aspects of auto-enrolment are thought about earlier in the process than we are generally seeing so far, working with organisations that have the earliest staging dates."
The report was based on responses to two CIPD surveys: the Autumn Labour Market Outlook, which surveyed moree than 1,000 employers and the Autumn Employee Outlook, which surveyed more than 2,000 employees.