Pension schemes are some of the most effective methods for an employee to enjoy financial freedom upon their retirement. Unfortunately, there have been many instances when workers missed out on such opportunities due to the fact that their employer did not provide them with viable options. There were also times when employees failed to file for a pension plan. These situations are about to change thanks to a new initiative introduced by the government of the United Kingdom. Beginning 1 February 2018, employers will be obligated to enrol eligible employees into a pension programme (1). This is being referred to as automatic enrolment.
A Little-Known Programme Soon to Become Prominent
In order to appreciate the impact that this scheme will have upon the workforce, Bidivine has recently conducted a survey of no fewer than 2,319 small business from across the United Kingdom. Some of the resulting statistics will serve to shed a bit of light on how employers will need to adapt (as well as to highlight the number which are unaware of how automatic enrolment functions). Let us take a quick look at some interesting findings:
- 35 per cent of those surveyed were unaware of automatic enrolment.
- 43 per cent stated that the adoption of this programme may impact their ability to hire new staff in the future.
- 33 per cent have not yet adopted these measures.
- 62 per cent of business owners believe that their staff will opt in for existing schemes.
What conclusions can we draw from these findings? Perhaps the most important observation revolves around the fact that more than one-third of those who were surveyed were not certain of the role that automatic enrolment played within the modern workforce. This is a bit disconcerting, for we have to wonder whether or not these organisations will be able to make the necessary changes before the February deadline expires.
Other Interesting Observations
Bidivine addressed a handful of other areas during this recent survey. For example, decision makers were asked if they believed that they had been provided with adequate information from the government. 65 per cent said that they were not given access to the necessary guidance. In fact, two-thirds of those surveyed were unaware when the deadline of auto enrolment would occur. However, it is also interesting to note that 43 per cent of these same firms stated that automatic enrolment was a valuable tool which should be implemented for the benefit of their employees. Bidivine co-founder Russ Morgan noted that:
““We were pleased to see that most business owners agree that auto-enrolment is a good idea, however it is slightly worrying that 43% said the extra cost will affect hiring new employees – something the government may have to consider in the future as it may affect employment.”
So, it is clear that businesses need to appreciate the impact of automatic enrolment in order to become prepared for legislation that will take place in 2018.