Two thirds do not fully understand cost
Nearly two thirds of employers (61%) do not fully understand how much auto-enrolment will cost their business, shows research published by Vebnet.
Auto-enrolment – which has been designed to ensure that more people save for their retirement – means that employers are now required to automatically include employees in a pension scheme if they offer one, unless the employee chooses to opt out.
Vebnet’s research, which was carried out by Research Now, found that cost is the single biggest concern for medium and large employers implementing auto-enrolment.
Administration was cited as the second biggest burden, and engaging with the right adviser or provider as the third.
The top three solutions employers were in favour of for addressing auto-enrolment related costs were: optimising existing benefits schemes to increase take up and maximise National Insurance savings; reducing spend across other areas of the business; and introducing salary sacrifice.
Richard Morgan, director of consultancy services at Vebnet, said auto-enrolment could bring “significant” cost and administrative challenges for employers.
He said: “It is important employers understand the impact on their business as early as possible and identify the resource requirements associated with implementing auto-enrolment.
“This will not only ensure a successful transition but more importantly this will allow them to develop business and employee benefits strategies to address any additional costs.”
A recent survey by GRiD, the trade body for the group risk industry, found that more employers had increased their spend on employee benefit packages ahead of auto-enrolment than had reduced it.