The research consisted of making around 10,000 phone calls to employers which are representative of the UK company population and then conducting in-depth interviews with senior HR decision makers in 300 randomly selected businesses to capture their attitude and current perspective on benefit provision.
When asked ‘what aspect of implementing auto enrolment did you find to be the most challenging?’ 37 per cent opted for administration whilst 23 per cent stated cost. So, while the costs of implementing auto enrolment are thought to be a financial strain on many companies, significantly more employers highlighted their administration duties as being a bigger challenge. 10 per cent find making time for planning and meetings to be the most challenging, closely followed by other challenges – communications, dealing with queries, technology, lack of support and timescale to implement.
While using a financial adviser for support was the most popular answer at 42 per cent, nearly 60 per cent of employers didn’t take this route and so may not have got advice on the best products and solutions available for them and their employees. This 60 per cent received support from either a pension provider, in-house support or an accountant.
Employers were also asked if a new pension was put in place to fulfil their auto enrolment commitment. It found that 57 per cent of employers put a new pension scheme in place. They would need to make sure that these schemes are eligible, cost effective and also that they are fit for purpose for the changing needs of their workforce.
Most companies are managing their auto enrolment administration in-house. This is probably a sensible approach for larger companies with bigger HR resources although is possibly not the most cost effective way for smaller companies to manage their pension duties. Others manage their auto enrolment through a pension provider or payroll/accountant.
Sean McSweeney, Corporate Advice Manager, Chase de Vere, says: “We are fully supportive of pension auto enrolment. This is an important initiative as we are facing a pension time-bomb with people living for longer and not saving enough to support themselves in retirement.
“However, the burden of implementing auto enrolment has fallen on employers and they can face real challenges. Our research shows that administration is their biggest concern and this will continue as employers have to abide by ongoing rules, although costs will also rise for many employers as minimum contribution levels are increased in April 2018 and again in April 2019.
“It’s not surprising that employers are trying to manage their auto enrolment scheme with little or no support, although this could be a false economy. To get the maximum benefit for the money they are spending, employers need to regularly review their pension arrangements and ensure effective communication and engagement with their employees. For many companies the best way to achieve this is to use an experienced corporate financial adviser.”