As accountants, we know only too well that employers are concerned about automatic workplace pension enrolment.
Many fear the financial repercussions of auto-enrolment and worry that by complying with the new regulations they will either be forced to cut jobs or restrict future employment opportunities. According to Chartered Institute for Personnel and Development (CIPD) figures, of the thousands of SMEs yet to enrol in automatic pension schemes, 48% of those surveyed expect they will have to limit future pay growth in order to pay for the scheme whilst 19% forecast a reduction in hiring and even an increase in job cuts. So the concerns over auto-enrolment are understandable.
However, it’s not all bad news for auto-enrolment according to the CIPD.
It’s study also found that many of the UK’s SME employers have wholeheartedly embraced the scheme, and are increasingly going above and beyond their automatic enrolment pension duties by contributing considerably more than the bare minimum. The CIPD survey found that whilst the legal minimum requirement demands that employers and employees contribute one per cent each, the average employer has in fact increased this number to 5.6% of an employee’s annual salary. Even though the CIPD figures show that this figure dips a little in the private sector, with average percentage contributions dropping to 4.5%, the CIPD still believes this is an encouraging sign of a growing confidence in the system as that figure is still over 4 times the minimum requirement.
Speaking about the survey, Charles Cotton, performance and reward adviser of the CIPD said:
“So far, pension automatic enrolment has been a success. It’s been the wake-up call we needed to get the UK saving for the future. Employers are in many cases going above and beyond the requirements and the majority of workers have opted to stay in the scheme. However, in the coming months, we need to keep a close eye on the number of workers leaving the pension scheme and what can be done to encourage them to stay.”
“We also need to explore ways that we can increase the amount of money going into saving for retirement. To do this, it’s essential that employees are encouraged to look at their employer’s pension contribution as well as their take home pay when thinking about their total earnings. This is particularly important at a time when many people are experiencing either wage freezes or subdued wage growth.”
If your business is concerned about the new auto-enrolment qualifying scheme or has any other concerns relating to pensions and savings’ planning, speak to Steven Glicher accountants. Our accountants have close contact with a number of independent financial advisers who can offer specialist advice on pensions, life assurance, investments, critical illness cover, income protection insurance, mortgages, elder care, private medical insurance and school fees planning.
For further information, call Steven Glicher accountants on 0161 485 8007, or email info@.