IoD’s Call For Auto-Enrolment Pension Delays ‘Unsurprising’

Expert 'Understands' Body's Stance On Government Plans

21.11.2011

Calls for the government to rethink plans to introduce auto-enrolment pension schemes for workers from next October are unsurprising in the current financial climate, according to a pension expert at Irwin Mitchell.

The Institute of Directors has claimed it is the “wrong time” for the proposals and they should be delayed by two years due to the potential impact it will have on employers, many of which would need further resources to offer contributions and pay rises.

It also suggested that the plans will fail as a number of workers would opt out, leaving businesses facing much “unnecessary” administration.

Pension experts at Irwin Mitchell, who advises employers and a range of other bodies on both personal and company schemes, have suggested that the stance of the IoD is understandable.

Nigel Bolton, a Partner at Irwin Mitchell’s Leeds office, said: “At a time when employers are expending all their energies in trying to keep their businesses going, the auto-enrolment plans do seem on the face of it an unnecessary distraction.

"Salary freezes and, in some cases, the redesign of entire employee benefit packages are both steps many firms will need to take to ensure compliance with auto-enrolment requirements.

“Costs for companies are also direct and indirect, with1% of salary to be contributed until 2016 and the need to replace or upgrade HR and payroll systems respectively.

“However, the new regime comes into effect in October 2012 and will only impact the biggest businesses to start with.  Most businesses, with less than 5,000 employees, will be caught during late 2013 and 2014 some two years later.

“When this happens, it is likely that a higher number of their workforce will either never been in a pension scheme or not bothered to join when eligible, so this will add considerably to their overall employment costs.”