Most individuals welcome the Government’s drive to automatically enrol eligible employees into a qualifying pension scheme, however many employers are unprepared for their responsibilities, research from the National Employment Savings Trust (NEST) has found.
Despite finding the current economic climate difficult, 63 per cent of those surveyed agree with the idea of auto-enrolment. More than two-thirds of those questioned said it would help ease the worry of saving for their retirement.
The new pension rules – described as the biggest shake-up to the pension system in decades – come as the Government tries to encourage more people to save towards their retirement.
Auto-enrolment requires employers to automatically enrol all eligible workers into an approved pension scheme by a certain date, known as their staging date.
Auto-enrolment launched for the largest employers in October 2012, with all businesses required to follow suit by 1 February 2018. Up to 11 million new savers are estimated to join auto-enrolment in the next few years.
However, the NEST report also revealed that many employers are still unprepared for the switch, with under half of those employing fewer than 5,000 employees confirming their pension provider to date.
Employers also cited other difficulties, such as:
- pension scheme choice
- communicating the changes to their workforce
Chief executive at NEST, Tim Jones, said: “Given the current economic constraints on the household budget you might have expected opposition from consumers for automatic enrolment but our research strongly suggests that they welcome the policy.”
“Knowledge that their pension is being taken care of through a low-maintenance approach driven by their employer gives savers peace of mind. Whether the level of contributions will be enough to meet their aspirations is a conversation for further down the line, but automatic enrolment is a great start.”
Many employers are unsure about how long it will take them to comply. NEST has advised allowing 18 months before the staging date to fully prepare.