27 September 2010
The ACA 2010 Small Firms' Pension Survey has identified that
there are mixed feelings towards the government's introduction of
auto-enrolment.
The survey identified that 1 in 5 small employers have only now
started to consider the financial impact of the new Rules which
affect small employers from 2014.
53% of these employers have said that this will add significant
costs to their business, whilst 29% have said that they will reduce
their future contributions into existing and new schemes to meet
the required costs.
That said 54% continue to be supportive of auto-enrolment but
are anticipating 35% of their employees to 'opt out' of the new
scheme.
Other key findings are:
- 60% of employers will auto-enrol their non-joiners in their
current scheme.
- 20% will close their existing scheme and auto-enrol all
employees into NEST.
- Approximately 20% will auto-enrol employees into a new scheme
or restrict entry in an existing scheme with the balance moved into
NEST.
- 66% say that an employer with one employee should be exempt
from NEST.
- 61% agree that employees with less than 3 months service should
not be enrolled in NEST.
- 96% of the firms not currently providing pensions, who took
part in the survey state that this is due to the cost.
ACA Chairman, Stuart Southall said:
"The success of the auto-enrolment policy in smaller firms is
likely to hinge on how well the economy recovers over the next few
years. The opt-out rates expected are much higher than we found
amongst larger organisations - 35% as against 15%. The 'cost of
pensions' to both employees and employers is the 'big issue' that
has prevented the extension of pension provision to date in the
sector. Whilst auto-enrolment may break the mould, if we are all
still paying higher taxes to recover over-spending, it's difficult
to see how this will not bump up optout rates. Much remains to be
done in educating the wider public about the importance of private
pension saving to boost retirement incomes and the need to make
room for higher levels of savings in spending plans."
"Certainly, our surveys of both larger and smaller firms have
found a clear consensus in favour of excluding firms with just one
employee from the auto-enrolment regime, with a majority looking to
remove firms with fewer than 5 employees. There is also a consensus
to exclude employees with under 3 months' service and for pension
contributions not to be based on the earnings basis laid out in
current rules. If adopted by Government, these changes would all
greatly simplify the launch of auto-enrolment."
To read the full survey click here
For further information on Auto-Enrolment click here
