Automatic enrolment will help small and micro businesses confront the ?pensions paradox?
01 October 2014
New research by NEST reveals that small and micro businesses have the lowest levels of pension provision in the UK, but a majority of these employers support the idea of workers having access to a workplace pension
New findings released by NEST suggest a potential Pension Paradox at play among small and micro business in the UK. Small and micro employers have the lowest pension provision, with 74 per cent failing to offer a workplace pension. Despite that, a majority (69 per cent) think that every worker in Britain should have access to a workplace pension scheme.
In 2015 45,000 small and micro UK businesses come under the new workplace pension duties, meaning they’ll need to set-up and enrol most of their workers in a workplace pension.
Although the majority were supportive of workers having access to a workplace pension, when it comes to delivering automatic enrolment almost one in three (30 per cent) said they were most worried about ensuring everything is set-up correctly and that they are meeting the legal requirements.
When asked what was most important to them in a pension scheme, employers said they are looking for a scheme that is straightforward and hassle-free to use (91 per cent) and that their workers can feel confident their money is safe in (87 per cent).
Commenting on the findings, NEST chief executive Tim Jones said:
‘We are 2 years in to the roll-out of automatic enrolment and the largest businesses in the UK have already enrolled around 4.5 million workers. 2015 sees a real shift; small and micro businesses who traditionally have no or little pension experience will be stepping up to the plate. This research suggests that despite very few offering a workplace pension there is a real desire to help their workers save for their retirement. Not only that, they want to be sure they can access a scheme that their workers can feel confident their money is safe in.
‘Automatic enrolment is a massive helping hand in helping employers tackle this pension paradox. Employers say that one of the most important factors in setting up an automatic enrolment scheme is that it is straightforward and hassle-free to use. Employers have told us: ‘we don’t offer a pension but we want to… so please make it easy to use!’ NEST has heard this cry, our employers tell us that NEST is easy to set up and use and we will bring in further improvements for smaller employers in time for their auto enrolment date.’
Launched 2 years ago today, automatic enrolment has so far been hailed a success as the policy ‘nudge’ which helps consumers to save for retirement, with around 4.5 million automatically enrolled since the policy launched.
Opt out rates are significantly lower than the predicted 35 per cent, running at 10 per cent on average. As well as helping consumers to save, NEST research suggests that the policy also helps the majority of businesses address the gap between their low pension provision and belief that every worker should have access to a workplace pension scheme.