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Cost management and pensions auto-enrolment top the employee benefits priorities, finds Aon Hewitt


The three most pressing benefits issues facing employers are managing cost; addressing low levels of employee engagement; and dealing with legislative changes, according to Aon Hewitt.

The global HR consulting and outsourcing business of Aon Corporation, has launched the third edition of its Benefits & Trends Survey which reveals the challenges UK companies are currently facing when developing employee benefits programmes.

The survey polled 185 companies throughout the UK, representing a combined global workforce of 650,000.

Auto-enrolment, where employees will automatically join a company pension scheme, was found to be the biggest priority for 2012. Companies with over 10,000 employees are scheduled to implement it as soon as October this year.

The Aon Hewitt Benefits and Trends Survey shows companies have improved the state of readiness for auto-enrolment: a fifth of respondents said they either already operate auto-enrolment or are ready for it. 67% of those surveyed are in the process of rolling out their implementation. However this means that 80% of companies are still not operational.

Given that auto-enrolment implementation is phased according to company size, some companies will inevitably be more advanced than others in their preparation process. This is reflected in the results, which showed that 46% of respondents with over 10,000 employees are ready or already operate an auto-enrolment model, while 40% of companies with between 5,000 and 9,999 employees indicated that they were at a similar state of readiness. In contrast, more than 50% of organisations with fewer than 1,000 employees have not started their preparatory work – again reflecting the different staging dates.

John Foster, defined contribution consultant at Aon Hewitt, said: “It comes as no surprise that larger companies are more advanced in their preparation for auto-enrolment than smaller ones as they have earlier staging dates. However, despite a major improvement in preparedness, our research has also shown some uncertainty in terms of how ready companies appear to be. It is incredible that a fifth of respondents, including some large firms, still do not know how many employees are in their existing DC scheme. This is particularly startling as it will have significant impact on the cost of auto-enrolment.

“Overall, auto-enrolment’simminent implementation explains why DC schemes have this year become a priority area of focus compared to 2011: it is a major project, with a knock-on effect on many other business functions such as IT and payroll. Internal communication and keeping employees engaged throughout this complex process have also been cited as key challenges by over 70% of respondents.”