New Research Reveals Trends Since Launch Of Scheme In 2012

By Rob Dixon

The findings of new Institute of Directors (IoD) research into auto-enrolment have highlighted how important it is for companies to plan ahead as they look to introduce the schemes in their workplaces, according to a pensions expert.

According to the study, 98 per cent of the body’s members said they were aware of the importance of automatically enrolling staff onto a pension scheme, which marked 78 per cent increase when compared to 2011.

More than 60 per cent stated they felt prepared to enrol their staff when the deadline comes around for their stage of the scheme, with just 15 per cent expecting that their employees would not get involved in the system.

However, on the issue of meeting changes related to the system, 42 per cent of businesses said they would do so through profits and a fifth suggested they may freeze or cut salaries.

Commenting on the new figures, Nigel Bolton, a Partner and pensions specialist at Irwin Mitchell’s Leeds office, said many of the key factors identified showed the clear need for preparation in relation to auto-enrolment.

He outlined: “This survey highlights why employers need to plan well in advance for auto-enrolment so they can use easy and tax efficient methods like salary sacrifice or exchange to neutralise any additional costs, rather than resorting to more draconian actions.

“A salary sacrifice scheme would take pension contributions from a worker’s salary before it is subject to tax. The use of such an initiative means that the National Insurance contributions of firms would be lower, so the cost of auto-enrolment can be offset.

“However, it is vital that employers looking to take such steps give themselves plenty of time to introduce such a scheme, as well as take the correct advice towards establishing the system.”

Nigel added: “Planning will be even more important for smaller businesses as the number of employers staging on a monthly basis will begin to reach and outstrip industry capacity. Unless these smaller businesses are in a position to deal with auto-enrolment themselves, there is a risk that they may be unable to find appropriate support.”

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