Kimberly Bradshaw, managing director of Buzzacott's HR consultancy, talks to HFMWeek about the recent results from research by the firm on the impact of auto-enrolment in the industry.

Auto-enrolment legislation helps address the pension gap in an ageing population and ensures that all employees are provided for in their later years, to some extent. All employers have to introduce auto-enrolment by 2017, irrespective of size or structure. Some are embracing it and using it as the opportunity to focus on a number of positive changes, others are putting it into place kicking and screaming. As it is now just over a year since the legislation came into force, the employee solutions team at Buzzacott commissioned some unique research comparing the reality of those who had already been through auto-enrolment with the expectations of those who are yet to do so. The results were quite unexpected.

KEY FINDINGS:

Views On Pensions As A Benefit

Pensions, benefits and employee engagement are rapidly moving up the agenda for organisations across the UK. Almost two-thirds (64%) of employers agreed that auto-enrolment has a positive benefit to society as it encourages employees to save more for retirement and brings important decisions about pensions to the fore. Three-quarters of the organisations interviewed recognised that having benefits in place is important for encouraging employee engagement. A further 76% said a pension scheme is an important element of overall employee benefits packages. Being able to attract and retain a loyal, satisfied and engaged workforce is critical for any organisation to face the opportunities and challenges ahead.

Confusion About Implementation

In spite of this, the research revealed confusion among employers about what is required of them to ensure compliance with auto-enrolment regulation. The research found that although auto-enrolment has generally been well-received, 40% of organisations not yet past staging date say auto-enrolment is the biggest challenge their organisation will face over the coming years.

Plan Well Ahead

When asked to pass on a piece of advice to organisations that have yet to begin planning, the more experienced executives in our research repeatedly mentioned the importance of planning and having a realistic implementation timetable. One in six (17%) organisations that have already reached their staging date said they would have started planning much earlier if they were to have their time over. A third (34%) said auto-enrolment took more time to implement than expected. It is a concern, therefore, that 43% of organisations said they plan to allow less than six months, an insufficient length of time to plan, implement and communicate all the changes required.

Review Your Existing Provision

As part of the planning process, it is also vital to review the existing pension provision. Organisations with an existing pension scheme need to make sure that it qualifies for auto-enrolment. Many existing pensions are not compliant and providers are very busy, so plan well in advance to find out what you need to know in order to make the right decisions.

The Cost To Your Organisation

The research showed that organisations tend to underestimate the financial investment required to implement auto-enrolment. The costs associated with implementation are, on average, a third higher for organisations that have yet to implement auto-enrolment than for organisations that have already reached their staging date (£332 vs £107). Furthermore, the research showed that opt-out rates are actually much lower than organisations anticipated; meaning cost to the business is higher.

Communicate And Engage

The success of auto-enrolment, just like any other widespread change impacting employees, also depends on how well it is communicated. Consultation with staff has been essential and has been used by many organisations as a means of employee engagement, as well as an opportunity to review HR.

Lessons learned from those who have gone through the process are:

  • Auto-enrolment need not be a headache, just plan well and don't underestimate the workload required
  • Don't miss out on the opportunity to use auto-enrolment to review wider employment engagement policies
  • Seek additional support from external advisers to give an objective view on how best to approach implementation when required.
  • Approach auto-enrolment like any other organisational change, have a realistic project plan and strong time management
  • Effective communication with employees is a critical success factor
  • Support and training from external advisors is also beneficial for a smooth planning and implementation process.

Originally published by HFMWeek.

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