Many in HR not proactive about U.K.'s auto-enrolment pension scheme

Only one-third know date new rules apply: CIPD

Many organizations in the United Kingdom are not taking a proactive approach to preparing for the auto-enrolment pension scheme, according to a survey of 653 HR professionals. As of 2012, employers will be legally obliged to automatically enrol workers aged 22 years or over and earning more than around £7,500 (C$11, 926) into a qualifying pension scheme to which the employer must contribute.

While 75 per cent of employers are fully aware of imminent changes to workplace pension schemes, less than one third (32 per cent) of employers know the date on which the new rules will apply to them. That's the finding of Labour Market Outlook: Focus on 2012 Pension Changes, a report from the Chartered Institute of Personnel and Development (CIPD).

Almost one-half (47 per cent) of respondents said their organization had either not identified their staging date (28 per cent) or were unsure (19 per cent). Almost one-third (31 per cent) of respondents working for organizations with 250 or more employees, whose staging dates are the most imminent, were unsure if their date had been identified or not.

Similarly, 38 per cent of respondents working for large organizations were unable to say whether or not the organization had already modelled the financial consequence of auto-enrolment, or was planning to do so within the next 24 months.

"My suspicion is that in these instances HR has assumed that another team or department within the organization is dealing with the response to the 2012 pension changes,” said Charles Cotton, CIPD reward adviser. “The concern is that these other departments may be assuming that HR is taking the lead in this area and so no actual progress is being made.”

And even if another department or team is responsible for this issue, it is important HR is involved in the organization’s plan for the introduction, implementation and communication duties arising from auto-enrolment, he said.

“By taking a proactive, rather than reactive, approach to preparing for auto-enrolment, organizations will be better placed to phase in any potential cost impact and to position themselves as employers of choice by communicating the benefits of saving for retirement."

However, 24 per cent of respondents and one-sixth of small and medium-sized employers (14 per cent) have already examined the cost implications of auto-enrolment and another 34 per cent of large employers and 37 per cent of SMEs are planning to do so within the next 12 months. Among those that have already costed the impact of auto-enrolment, 42 per cent said it will have no impact on the value of their current pension offering, while 22 per cent reported it will increase.

Almost one-quarter (22 per cent) anticipate making their scheme less generous as a result of auto-enrolment. An additional 13 per cent said they currently do not know what the outcome will be, found CIPD.

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