CIPD research: Employers not taking proactive approach to 2012 pension reforms

While the majority (75%) of employers are fully aware of the forthcoming pension reforms, including auto-enrolment, less than one-third (32%) know the date at which the new rules will apply to them, according to research by the Chartered Institute of Personnel and Development (CIPD).

The CIPD’s Labour market outlook: focus on 2012 pension changes, conducted by YouGov, surveyed more than 600 HR professionals. It also showed that 47% of respondents had either not identified their staging date (28%) or were unsure of it (19%).

One-third (31%) of respondents working for large organisations, with the most imminent staging dates, were unsure if their date had been identified or not.

Similarly, 38% of respondents working for large organisations were unable to say whether or not the organisation had already modelled the financial consequence of auto-enrolment, or were planning to do so within the next 24 months.

Charles Cotton, reward adviser at the CIPD, said: “My suspicion is that in these instances HR has assumed that another team or department within the organisation is dealing with the response to the 2012 pension changes.

“The concern is that these other departments may be assuming that HR is taking the lead in this area and so no actual progress is being made.

“Even if another department or team is responsible for this issue, it is important that HR is involved in the organisation’s plan for the introduction, implementation and communication duties arising from auto-enrolment.

“By taking a proactive, rather than reactive, approach to preparing for auto-enrolment, organisations will be better placed to phase-in any potential cost impact and to position themselves as employers of choice by communicating the benefits of saving for retirement.”

Despite these concerns, nearly a quarter (24%) of large employers surveyed and one-sixth of small and medium-sized enterprises (SMEs) have already examined the cost implications of auto-enrolment. Another 34% of large employers and 37% of SMEs are planning to do so within the next 12 months.

Among those that have already costed the impact of auto-enrolment, 42% said that it will have no impact on the value of their current pension offering, while 22% reported that it will increase. Just 22% anticipate making their scheme less generous as a result of auto-enrolment. An additional 13% said that they currently do not know what the outcome will be.

Cotton added: “While the on-going pressure on employee-living costs is of great concern, taking a short-term view will eventually leave people worse off.

“Employees and their employers need to rise to the challenge today in order to safeguard the future. Although there will be some short-term cost pressures associated with auto-enrolment implementation, the long-term gains and value will be significant.”

For articles on the 2012 pension reforms