Majority of firms against pensions auto-enrolment

More than six in 10 UK companies are against automatic enrolment of employees into pension schemes, according to research.

Under the proposals of the Pensions Commission, all employees would be automatically enrolled in occupational pension scheme. Staff who did not have access to a scheme would automatically join a National Pensions Saving Scheme, into which they would contribute 5% of their pay and their employer would pay in the equivalent of 3% of the employees earnings.

But 61% of companies polled by pensions administration firm Capita Hartshead said that enrolling employees in this way would prompt them to revise or even abandon their schemes.

Derek Meldrum, a spokesman for Capita, said the reluctance was partly down to cost, but more to the potential administrative burden of an auto-enrolment system.

The survey, which questioned 243 companies running pension schemes with 4.4 million members, also showed that 21% of employees had not joined their company’s occupational pension scheme.

Meldrum blamed financial constraints and differing priorities.

“Younger people are faced with increasing rent or mortgage costs and may have student loans. They do not want to see their income reduced,” he said.

Capita’s survey showed that 54% of final salary schemes covered by its survey were now closed to new members, an increase of 8% on last year.

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