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Auto-enrolment preparation could cost business £15.4bn

September 19, 2013  /   No Comments

Anna Scott

Meeting the costs of the new pension auto-enrolment legislation could cost come at a cost to UK business of £15.4 billion, a report has suggested.

A total of 33 different administrative tasks will also need to be completed for companies to meet the new regulatory requirements, according to the report from the Centre for Economic Business Research, called ‘Finding your way out of the auto-enrolment maze’. These are expected to take up to 103 days work for each firm, and over three days each month on a recurring basis.

Employers must automatically enrol any UK-based workers that earn more than £9,440 per year and are aged between 22 and the state pension age into a workplace pension scheme, according to the legislation.

Small businesses with fewer than 100 employees will face a set-up fee of £8,900 to prepare for the new legislation. This figure rises to £12,600 for businesses with 100 employees and £15,600 for those employing 250 people. At the other end of the spectrum, large companies with up to 500 staff are facing an average bill of £22,300 for the one-off costs of implementing auto-enrolment.

Regional labour costs across the country could see these costs pushed even higher, with the predicted bill for the largest firms in London hitting £28,300, the report suggests.

Businesses that choose to use the National Employment Savings Trust (NEST) government pension scheme for their employees will still face these costs and administrative challenges because they need to complete all the preparatory work.

“The work involved is potentially huge, specialist and complex,” says David White, managing director of Creative Auto Enrolment, which commissioned the research. “The staging dates for each business are coming, and each and every company, regardless of size, will need to prepare. There’s no benefit to businesses delaying getting their auto enrolment strategy in place, but hefty fines will penalise those who don’t meet their responsibilities in time.”

Automatic enrolment is being staged in over a six-year period, which started with the largest employers on 1 October 2012, and will end in February 2018. Staging dates are determined by the size of your company’s largest PAYE scheme – the more people in a scheme the earlier the staging date.

A fixed penalty of £400 can be imposed on employers that do not comply with the legislation, and in some cases the Pensions Regulator can compel employers to pay a daily penalty of between £50 and £10,000, depending on how many employees are affected.





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  • Published: 9 years ago on September 19, 2013
  • Last Modified: September 30, 2013 @ 9:02 am
  • Filed Under: News, Weekly Bulletin

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