HR should be proactive in auto-enrolment pension planning

  9th December 2011      
 CIPD, Company News

The latest CIPD survey shows that many organisations are not proactively preparing for the auto-enrolment pension scheme. HR professionals should not assume that this issue is the responsibility of another department and should instead seize the chance to reap the benefits.

Although most employers (75%) are fully aware of the forthcoming changes to workplace pension schemes, they are not so prepared for auto-enrolment with only 32% knowing even what date the new rules will apply to them.

The CIPD survey ‘Labour Market Outlook: Focus on 2012 Pension Changes’ of more than 600 HR professionals found that 28% of respondents’ organisations had not identified their staging date while 19% were unsure. 31% of those working for large organisations were unsure if their date had been identified or not — although in actual fact theirs is the soonest to be affected by the changes. Similarly, 38% of those who work for large organisations did not know whether or not their employer had already modelled the financial consequence of auto-enrolment or was planning to do so in the next 24 months.

CIPD Reward Adviser, Charles Cotton, says: “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 or team is responsible for this issue, it is important that HR is involved in the organisation’s plan for the introduction, implementation and communication duties arising from auto-enrolment. By taking a proactive, rather than reactive, approach to preparing for auto-enrolment, organisations will be better places to phase in any potential cost impact and to position themselves as employers of choice by communicating the benefits of saving for retirement.”

Despite these concerns, we can still be optimistic that employers will meet the 2012 challenges. 24% of large employers and 14% of small and medium-sized employers have already examines the cost implications of auto-enrolment while 34% of large organisations and 37% of SMEs are planning to do within the next 12 months.

Among those who have already examined the cost impact of auto-enrolment, 42% of those surveyed say it will have no impact on the value of their current pension offering, while 22% say it will increase. Only 22% anticipate offering a less generous pension scheme as a result of auto-enrolment, while 13% are currently unsure of the outcome.

Among those employers who said they have already examined the cost impact of auto-enrolment, other economic consequences expected in 2012 include lower wage growth and reduced hiring intentions.

Charles Cotton adds: “While the on-going pressure on employee living costs is of great concern, taking a short-term view will eventually leave people worse off. Employees and their employees need to rise to the challenge today in order to safeguard the future and, although there will be some short-term cost pressures associated with auto-enrolment implementation, the long term gains and value will be significant.”

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