Only 7 per cent of larger employers have firm plans on auto-enrolment

Millions of people are not saving enough to have the income they are likely to want in retirement. Life expectancy in the UK is increasing and at the same time people are saving less into pensions.


In 1901 there were 10 people working for every pensioner in the UK. In 2005 there were 4 people working for every pensioner. By 2050 it is expected that this will change to just two workers for every pensioner.*

Reform of workplace pensions
The Pensions Act 2008 laid the foundations for a fundamental reform of workplace pensions, requiring every employer to automatically enrol their workers into a qualifying pension scheme, if they are not already in one, and contribute to that pension.

Addressing the issues
Automatic enrolment aims to address the issues that prevent people from saving into a pension scheme, such as:

- pensions saving being complicated and confusing;

- people simply not getting around to it;

- a lack of suitable pension products being available for people on low to moderate incomes; and

- lack of employer pension provision, particularly in smaller firms.

Auto-enrolment regulatory requirements
The majority of larger employers (93 per cent) do not yet have firm plans in place to meet auto-enrolment regulatory requirements, according to research from Standard Life. The timing depends upon the size of the employer. This will apply to very large employers first, in late 2012 and early 2013. Other employers will follow during 2013 to 2016.

The pension scheme must be a qualifying scheme, meaning it must meet certain government standards. This is the first time that employers have been required by law to contribute to their workers’ pensions.

Undecided about contribution levels
Of the 200 larger employers surveyed by Standard Life, just 7 per cent had reached a decision on how they will deal with auto-enrolment. 39 per cent had set a date by which a decision will be made, however, over half of those surveyed (54 per cent) did not know when they would have their plans in place.

Over half (56 per cent) were undecided about the contribution levels they would be making for new members being auto-enrolled. Around a third (36 per cent) of employers confirmed they would pay the same levels and just 5 per cent indicated they would reduce payment for new members.

The research highlights that many employers still have some big decisions to make. The majority of those surveyed will need to commence auto-enrolment at some point during 2013 and there is a great deal of planning work that needs to be undertaken.

Spending time now understanding the financial impact of auto-enrolment will help employers identify the difficult decisions that need to be made. The sooner employers start the planning process, the easier the financial and administrative transition will be. To find out more please contact us.

*Department for Work and Pensions