Administration is a bigger challenge to firms implementing auto-enrolment than the cost of contributing to their employees’ pensions, a survey of 10,000 employers has found.
Research by Chase de Vere, the independent financial and corporate advisers, in conjunction with Lightbulb, found 37 per cent of a representative selection of the UK employer population said administration was their biggest challenge, compared to 23 per cent who cited cost. Making time for planning and meetings, communications and technology were the biggest challenge for 10, 9 and 7 per cent of employers respectively. But the timescale to implement auto-enrolment was an issue for just 2 per cent.
Just 42 per cent of employers sought support from a financial adviser, with 32 per cent supported by pension providers and 21 per cent dealing with auto-enrolment in-house.
The research consisted of 10,000 phone calls to employers representative of the UK company population and in-depth interviews with senior HR decision makers in 300 randomly selected businesses.
What aspect of implementing auto enrolment did you find to be the most challenging?
|Making time for planning and meetings||10%|
|Dealing with queries||7%|
|Lack of support||6%|
|Timescale to implement||2%|
|Who provided support?||Percentage|
|How do you manage administration?||Percentage|
|Payroll / accountant||11%|
Most companies are managing their auto enrolment administration in-house. This is probably a sensible approach for larger companies with bigger HR resources although is possibly not the most cost effective way for smaller companies to manage their pension duties.
Chase de Vere corporate advice manager Sean McSweeney says: “We are fully supportive of pension auto enrolment. This is an important initiative as we are facing a pension time-bomb with people living for longer and not saving enough to support themselves in retirement.
“However, the burden of implementing auto enrolment has fallen on employers and they can face real challenges. Our research shows that administration is their biggest concern and this will continue as employers have to abide by ongoing rules, although costs will also rise for many employers as minimum contribution levels are increased in April 2018 and again in April 2019.
“It’s not surprising that employers are trying to manage their auto enrolment scheme with little or no support, although this could be a false economy. To get the maximum benefit for the money they are spending, employers need to regularly review their pension arrangements and ensure effective communication and engagement with their employees. For many companies the best way to achieve this is to use an experienced corporate financial adviser.
“Nearly 60 per cent of employers didn’t use a financial adviser and so may not have got advice on the best products and solutions available for them and their employees.”