Auto-enrolment Boost As Uptake Figures Rise
Uptake of the recently introduced auto-enrolment workplace pensions could rise as high as 82%, new findings by the Chartered Institute of Personnel and Development (CIPD) show. The CIPD’s findings come after several studies in 2012 found awareness of the new system to be worryingly low.
In July, A YouGov poll, commissioned by Aon Hewitt, found that as few as one in five members of the public were aware of the introduction of auto-enrolment. In September, one month before auto-enrolment was set to commence, research by Scottish Widows found that over half its workforce were “completely unaware” of the new scheme and what it would mean for them.
The findings prompted many in the industry to call for an upscale in both advertisement and employer effort to inform employees of the changes. James Patten, benefits design specialist at Aon Hewitt, stressed the need for a communications strategy that involved all levels of the pension structure: from the employee, through to the employer and scheme trustees.
“Given the government has had limited success in raising the initiative’s profile, many employers will need to ensure they give due attention not just to the burdensome processing aspect of auto-enrolment, but to how auto-enrolment is perceived by the workforce.” Patten said.
Patten’s advice, to develop a multi-faceted approach, including “brief warm-up communication as well as educational roadshows” seems to have worked. The CIPD’s report showed that, of 2000 employees questioned, 62% of those without an existing workplace pension scheme said they would happily remain opted-in to their scheme once auto-enrolment took effect. The report also revealed that employer awareness had risen: of 1,000 employers polled 88% said they were “fully aware” of their responsibilities to their employees.
While the findings are encouraging for those concerned about an impending pensions crisis, the CIPD also found that only 50% of employers have taken steps beyond simple compliance with the auto-enrolment initiative. The study revealed that most employers were neglecting efforts to understand how auto-enrolment will affect independent trustee services engaged in the management of the pension scheme – or how it will meet both business needs and the needs of their employees.
Charles Cotton, the CIPD’s rewards adviser, warned unprepared businesses may struggle as the long-term effect of auto-enrolment becomes known:
“It looks likely that automatic pension enrolment will significantly boost the numbers of employees saving for retirement” said Cotton. “But given that the cost of pensions is a major business outlay for most employers, it is somewhat disappointing that so few have started collecting data to assess the impact that these reforms may have.”
With around 11 million people and 1.2 million employees set to be affected by auto-enrolment by the end of 2018, strategies to deal with its consequences are important – with some organisations opting to offset costs by altering wage growth or even cutting benefits. Cotton is urging businesses to “examine how they can turn these costs into an investment” – to not only bring a return to the company, but to sustain the level of employee engagement and uptake that auto-enrolment has seen so far.