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Two thirds of employers yet to understand the cost impact of auto-enrolment

Nearly two-thirds of employers do not yet fully understand how much auto-enrolment will cost their business, according to research published today by employee benefits solutions firm Vebnet.

The research indicates that cost is the single biggest concern for medium and large employers implementing auto-enrolment, with the administration burden second and engaging with the right adviser or provider third.

The research advised that employers identify solutions to address additional costs associated with auto enrolment, including:

  • Optimising their existing benefits schemes to increase take up and maximise NI savings
  • Reducing spend across other areas of the business
  • Introducing salary sacrifice

Richard Morgan, director of consultancy services, Vebnet said: "Auto-enrolment could bring significant cost and administrative challenges for some employers. It is important employers understand the impact on their business as early as possible and identify the resource requirements associated with implementing auto-enrolment.

"This will not only ensure a successful transition but more importantly this will allow them to develop business and employee benefits strategies to address any additional costs."

He added: "I would recommend that employers seek professional guidance on their wider employee benefits strategy as costs savings can be achieved through a number of initiatives before purely cutting or reducing the benefits they offer their employees."

The research was conducted from a sample size of 213 organisations with at least 500 employees. It was conducted online in October 2012.