Since October 2012, employers have been required to enrol certain workers into a pension plan and to make an employer’s contribution to it.
The legislation is being phased in, starting with large organisations and applying to small employers over the next few years.
From the evidence my team collected for the Chartered Institute of Personnel and Development (CIPD) Annual reward survey, published in May 2013, employers are highly exercised by auto-enrolment.
The respondent sample, which covers large to small organisations in both the for-profit and not-for-profit (including state) sectors suggests that many HR professionals feel caught between the regulations and employee resentment towards auto-enrolment. Some mention problems in both communicating with staff about the changes and in getting the attention of senior management.
Rather than regarding auto-enrolment as a compliance burden, smart employers will look at turning it to their advantage.
The Pensions Regulator encourages employers to ‘know their workforce’, their staging date, and to have a plan of action. For example, employers need to ensure their auto-enrolment system is adapted to reflect changes to earnings thresholds; new rates effective 6 April 2013.
The survey results indicate aspirations to rebalance the reward mix. Proactive communication, including the better use of total reward statements, could help. Education is needed on the benefit of deferred income in employers’ pension contributions and access to a scheme that administers it.
Better knowledge of the overall reward package can be viewed by employees as empowering and, given the prospect of mobility between employers during ever-lengthening career trajectories, controlling their portable pension pot is something staff have a major stake in.
– Professor Stephen J. Perkins is Dean of the Business School, London Metropolitan University