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Auto-enrolment could be the Government policy that succeeds and is popular, says pensions minister

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Early feedback to the first phase of auto-enrolment has been “stunning” according to pensions minister Steve Webb (pictured), while Steve Jones, pensions manager at Asda – one of the first companies to stage – said opt-out rates at the food retailer had been a mere 8%.

Speaking at a conference, attended by more than 600 of human capital management technology and service provider Ceridian's customers, Webb said auto-enrolment had the "chance of being the Government policy that succeeds and is popular".

"The time is right. We are giving auto-enrolment to a fertile soil," Webb said, joking that his role during 2013 would be to go up and down Britain "stirring up apathy" to ensure employees did not opt-out.

"We have taken the hassle away from individual employees and given it to you, the employer. Thank you," he said.

Jones said Asda had enrolled some 60,000 colleagues who had not been in a pensions plan. He said it was vital to get the communications right.

"By definition, this audience is already non-engaged in pensions," he said.

"Pensions are seen as something done to them. To succeed it is essential to get cross-business engagement and executive sponsorship."

Their comments appear to contradict a report last week from Aviva that suggests as many as 37% of workers intend to opt-out of the Government's new initiative to auto-enrol them into a pension scheme.

Punter Southall DC Consulting principal Neil Latham, who took part in a panel chaired by HR editor Siân Harrington, said the situation was more complex than either scenario suggests.

Its client research has identified two schools of thought among employers: those who expect high opt-out rates driven by affordability and the difficulties of living on a reducing income in a tough economy, and those who are auto-enrolling employees who have already been offered membership of a pension scheme at work, but have not joined.

"These workers are not good at paperwork and there is no reason to expect them to be any better at navigating the deliberately difficult process of opting-out," said Latham.

"Inertia stopped them joining and inertia will keep them in until their second or third payslip. At this point, if affordability is the issue, members will cease their contributions, leaving the scheme provider with all the costs of setting up a policy with a tiny value and the Government's initiative in ruins.

"A further wave of leavers could follow the first annual statement, when they realise how little the contributions they have saved are worth."

He added that there needed to be a simpler process to keep employees saving until their pension pots were big enough to be useful.

"A decent state pension and a compulsory top-up pension for all workers looks a compelling way forward," Latham said.

Ceridian managing director Doug Sawers said the record attendance at this year's event demonstrated the serious concerns businesses have on how to best comply with pension reform at the lowest cost.

"Auto-enrolment represents the biggest change to the cost of employment to hit UK businesses in the last 15 years," he said. "In the current climate, minimising the extra cost involved in administration and contributions by adopting the right solution and engaging with employees is a top priority.

"[Employers] need to plan well in advance - 12 months as a minimum - and organisations cannot comply accurately without payroll, which is pivotal to accurately and efficiently determining when an employee should be enrolled into a pension scheme and make a contribution.

"Choosing the right technological solution to ensure compliance and reduce cost is critical."