Only 28% of smaller firms have budgeted for the cost of auto-enrolment, according to new research from the Association of Consulting Actuaries (ACA).
A million challenges ahead, the first report from the ACA’s 2012 Smaller firms’ pensions survey, found the majority of respondents with 250 or fewer employees were unprepared for the reforms and were ignorant of the legislation’s requirements.
Fewer than 20% of the firms were aware of the details of auto-enrolment. Of those that were, 53% referred to it as complex while 23% found it very complex.
Andrew Vaughan, chairman of the ACA, said, though it is right that even the smallest firms should offer pension provision to their employees, he questioned whether the rules are overly complex for the one million small and medium-sized enterprises (SMEs) that will begin to auto-enrol employees from mid-2014.
He added: “Let us also hope the economic situation and the public’s perception of the benefits of pension savings will improve during the staging period, otherwise the feedback from our survey suggests that concerns over both cost and disillusionment with pensions may prompt high opt-out rates.
Half of respondents with an existing scheme will enrol their employees into that scheme, but 27% said they are unsure, three times the 9% that answered the same two years ago.
Among employers without an existing scheme, 42% said they are unsure how they will comply with the legislation, compared with 38% that will use the national employment savings trust (Nest) and 19% that will use another employer scheme.
Let’s face it, they’re too complex for LME’s with significant resource and support, let alone SME’s.
As for the 38% who said they will use NEST, doesn’t this demonstrate a lack of awareness in itself?