Employers worried about complexity of pension auto-enrolment

Employers are more concerned about the administrative complexities of having to automatically enrol staff into pension schemes than the cost of funding contributions, according to feedback gathered by PricewaterhouseCoopers (PwC).

Employers’ auto-enrolment duties are expected to come in to force from 1 October 2012 and will be introduced gradually over the following four years, depending on the PAYE scheme size of the employer. Workers will be able to opt out of their employer’s scheme if they so choose.

An independent review of the proposals to automatically enrol employees into workplace pensions is due to present its conclusions to the Government by 30 September 2010.

David Yeandle, head of employment policy at manufacturers’ association EEF and a member on the independent review team, said: “Part of our brief was to see if we could make auto-enrolment work better for employers, employees and the taxpayer, and certainly one of the aspects we have been looking at is what, if anything, we could suggest to make the legislation and administrative processes for employers simpler.”

However, there is some concern about what measures will be implemented to simplify employers’ auto-enrolment process.

Marc Hommel, PwC pensions partner, commented: “We would like to see a change in the current intention to require companies to enrol staff on their first day of work. Employers should also have the flexibility to enrol all workers (not just those above a particular threshold), if this would prove simpler and alleviate the challenges of communicating to staff at different earning levels.”

Richard Wilson, senior policy adviser at the National Association of Pension Funds, said: “The whole point of the reforms was to get pensions out to groups who’d never had access to pensions before. It may be difficult for employers but it will benefit the UK economy in the future if people have saved for retirement.

“Cutting out small employers, for example, would have short-term benefits for those companies but in the long term we’ll still have millions and millions of people without pensions. We think that in the grand scheme of things that’s a bad idea and we hope the review team doesn’t recommend that.”

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