When it comes to pensions, auto-enrolment (otherwise known as National Employment Savings Trust, or NEST), is the top concern for UK employees. Whatever the pros and cons of NEST, its launch commences from next year onwards, making it increasingly important for employees and employers alike to know what is required of them. This then begs the question, where do employers fit into all of this?
NEST, which was first conceived as a Personal Accounts scheme as early as 2002, is designed to be a simple and low-cost pension scheme that gives members an easy way of building a pension pot. From October 2012 some employers will begin to be required to enrol all eligible workers into a qualifying workplace pension agreement and also either contribute to this pension or offer membership to a defined benefit scheme.
The introduction of auto-enrolment may seem like another regulatory complication for employers and a complex new development to workers’ retirement planning. However, implementing the national scheme could provide a welcome opportunity for employers to develop the relationships they have with their employees, increase staff engagement and uptake of the corporate package as well as helping employees make important decisions regarding their financial future.
With this process starting in earnest, one might assume that employers would be gearing up to advise and prepare their employees for this step change in the way their pensions are managed within the workplace. However, a survey of employers we conducted recently * showed this couldn’t be further from the truth. 61% of employers admitted that there is a serious gap in their knowledge of auto-enrolment, and just under one third (31%) who are aware of the changes do not intend to give their employees any additional support or training to explain the legislation in any detail.
While it is concerning that the level of awareness is so low for such an important change in workplace pensions, particularly this close to implementation, all is not lost. The good news is that it’s not too late; many employees are hungry for information and look to their employers as experts on matters such as this. Improved relationships await those employers who take advantage of this opportunity.
* Survey conducted in May 2011 by Close Asset Management