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Cath Everett

Sift Media

Freelance journalist and former editor of HRZone

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Employers drag feet in evaluating cost impact of pension auto-enrolment

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The introduction of pension auto-enrolment among large companies next year will result in lower wage growth in some instances as well as reduced hiring activity and less generous employer contributions in others.

These are the key findings of a survey among 653 HR professionals undertaken by the Chartered Institute of Personnel and Development and published in a report entitled ‘Labour Market Outlook: Focus on 2012 Pensions Changes’.
 
The study revealed that only just under a quarter of large employers and 14% of small-to-medium-sized firms had already evaluated the cost implications of the move to auto-enrolment, while 34% of the former and 37% of the latter planned to do so over the next 12 months.
 
A concerning 38% of HR professionals at large companies were unable to say whether their organisations had modelled the financial consequences of the new policy or not or whether they planned to do so over the next 24 months, however. This was despite the fact that it comes into force for firms of this size from October next year.
 
Of those that had already worked out the economics of the situation, however, 42% believed that it would have no effect on the value of their current pension schemes, while 22% expected them to increase.
 
Passing the buck
 
The same number also anticipated making their scheme less generous as a result of the new policy, while 33% expected to see lower wage growth and 18% predicted a reduction in hiring activity.
 
Worryingly, however, while three quarters of respondents were aware that auto-enrolment was due to be introduced, just under a third knew the date on which the phased roll out would start applying to their organisation.
 
Some 28% had failed to identify their staging date, while a further 19% were unsure of it, a figure that again rose to 31% among large firms.
 
Charles Cotton, the CIPD’s reward adviser, said: “My suspicion is that, in these instances, HR has assumed that another team or department within the organisation is dealing with the response to the 2012 pension changes. 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.”
 
Even if another department was taking responsibility for the issue, it was important that HR was involved in the organisation’s plan for introducing and implementing it as well as communicating any new staff duties, he added.
Author Profile Picture
Cath Everett

Freelance journalist and former editor of HRZone

Read more from Cath Everett
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