Auto-enrolment is intended to help us save a little more for our future. But it seems like the cost of that is being paid now as employers worry that auto-enrolment will cost them a tenth of their payroll
In HR departments across the land there’s a (compound) word that will be tiresomely familiar: auto-enrolment. Whilst businesses get ready for the new pension scheme’s rollout, there have almost certainly been a few niggles and worries about how it’s all going to work. The official government line is that the wrinkles of the scheme have all been worked out. But, worryingly, a study from international law firm Eversheds reveals that employers fear the switch to automatic enrolment will cost them 10% of their payroll. Ouch.
Of the 245 employers surveyed over half felt that the cost to them would amount to up to a tenth of their payroll. This is significantly worsened when one takes into account that 57% of respondents had grave misgivings about their ability to recoup these extra costs. Whilst this immediate financial burden is a pressure in itself, what’s more half of respondents also felt that the biggest challenge involved in the auto-enrolment scheme was likely to be administrative, with a further 28% identifying that processing employees opting in and out were likely to add significantly to admin workload.
Despite this, the survey found that the majority of businesses will by ready for the rollout and didn’t suggest that there was resistance to the scheme wholesale. Allowing respondents to select improvements they would like made to the scheme, Eversheds’ research revealed that over two-fifths of employers would like workers to have the chance to opt-out ahead of being enrolled in the scheme, thereby cutting unnecessary administration. Additionally, 20% of those that responded would like earnings thresholds stripped from the scheme, so they didn’t have to spend time continually monitoring employees’ income.
Auto-enrolment is most definitely looming on the horizon now and it seems the majority of businesses are ready for the changes. They just aren’t sure they want to foot the bill.