Around three-quarters (79%) of respondents that already have a workplace pension scheme in place opted to use their existing scheme for auto-enrolment, according to research by the Department for Work and Pensions.
Its Employers’ pension provision survey 2015, which is based on a survey of 3,008 private sector employers, also found that 36% of respondents that are yet to stage and already offer workplace pension provision intend to use their existing scheme.
The research also found:
- Around a third (36%) of employers that did not have an existing workplace pension scheme in place, set up a new stakeholder, occupational or group personal pension or group self-invested personal pension plan for auto-enrolment, and 40% used the National Employment Savings Trust (Nest).
- More than half (53%) of respondents that have not yet staged and that do not have an existing pension scheme in place do not know where they will enrol their employees.
- 83% of staged respondents face higher contribution costs as a result of auto-enrolment.
- Almost half (49%) have, or intend, to absorb these costs or reduce profits, while 12% plan to offset the increased costs by making changes to their pension scheme.
- 95% of respondents yet to stage are aware of auto-enrolment, and 65% are aware of the minimum pension contribution rate.
- More than half (55%) of respondents yet to stage have started to plan for auto-enrolment but have not yet taken any action.
- 6% of respondents have conducted the auto-enrolment process ahead of their staging date.
- 74% of respondents yet to stage expect their pension contribution costs to increase as a result of auto-enrolment.
- 14% of employers yet to stage plan to contribute above the legal minimum contribution rate.
40% use Nest? – I wonder how many employers knew about the potential IHT liability on pension funds, low limit on contributions and inability to accept transfers in or out.
Or understand that Nest won’t guide them on the differing costs to the employer of each of the four definitions of pensionable salary.
Or, if any of their staff / Directors enjoy some kind of Lifetime Allowance Protection on their pension funds, the catastrophic impact of auto enrolment on those funds – an up to 55% tax charge on the excess over the Lifetime Allowance.
Ouch.