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Pensions Regulator warns businesses are underestimating how long it will take to prepare for pensions auto-enrolment

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The Pensions Regulator (TPR) has urged employers to step up their preparations for automatic enrolment, as evidence emerges that businesses are underestimating the time it will take to get ready.

Rising levels of awareness and understanding of the reforms are reported in TPR research published yesterday, as the UK's largest employers approach their automatic enrolment staging date.

The report found 98% of large businesses - with staging dates between October 2012 and February 2014 - remain confident that they will ready on time, and 82% have taken steps to prepare.

But 28% of large private sector employers believe automatic enrolment preparations will take less than three months and 20% of large public sector employers suggest it will take less than a fortnight.

Most large employers (85% private sector; 81% public sector) have taken some form of action; 67% of large employers had consulted another party, with pensions consultants (25%), pension providers (18%) and IFAs (12%) the main sources of advice; Nearly a third of all large employers believe that preparing for automatic enrolment will take less than three months; Half of employers will leave it as late as possible before thinking about getting ready for automatic enrolment.

The research found 98% of large employers are confident that they will have done everything by the deadline set. This figure drops to 85% when looking at micro employers, who will not need to automatically enrol until 2015 at the earliest. And 82% of large public sector employers believe they'll be able to deal with the administration of automatic enrolment, up 5% from the 2011 figure.

Executive director for employer compliance at TPR, Charles Counsell, said: "Based on what we've seen so far, we estimate that it will take the average large business about 18 months to plan and get ready, including making the necessary adjustments to processes and systems like payroll, HR and pensions. Leaving it as late as possible runs the risk of making preparations more costly and complex.

"We're writing to all large employers at the 18 months-to-go mark. Businesses with staging dates in the next 12 months should already have in place a detailed plan of action, including proposals for assessing their current pension scheme for automatic enrolment or, if necessary, considering whether they'll be setting up a new scheme.

"All employers will hear from us at least a year before their staging date, so there's no excuse for not knowing when these duties take effect. We are providing the support that employers will need to play their part in making workplace pensions reform a success for millions of UK workers, via online tools, detailed guidance and a checklist for selecting an appropriate pension scheme."

The regulator is communicating with employers as their staging date approaches. Large businesses are being targeted now, with smaller companies scheduled to start receiving information on their duties from 2013.

The research took place in April/May 2012 and was carried out with a nationally representative sample of private sector organisations. A total of 609 interviews were completed with private sector employers. An additional 105 interviews were conducted with large public sector employers.