By Daniel Hunter

Nearly three quarters (71%) of employers find pensions automatic enrolment complex, reveals the second report from the Solihull-based Chartered Institute of Payroll Professionals (CIPP) investigating the position of the industry since employer automatic enrolment duties came into effect in October 2012.

This is a significant rise from the 54% of respondents who felt this way in the 2012 survey. The CIPP second research paper to understand business readiness for automatic enrolment includes responses and comments from 95 participants, from a wide range of sectors and consists of employers, pension providers, payroll software developers and those who provide payroll services to employers.

The research found that unlike the 2012 results where a third (33%) of respondents stated they had not heard of the legislation, all respondents involved in the 2013 survey have. Of the respondents who have assessed the financial implications that automatic enrolment will have on their organisation for budgetary purposes:

- 41% believe there will be little or no impact which is an increase of 6% from 2012, but again mainly due to an already high pensions scheme participation level;

- There is a slight increase from 15% in 2012 to 18% in 2013 of respondents who believe that the impact will mean reduced or no pay rises for their workforce in the foreseeable future;

- There is a 5% increase from 1% in 2012 to 6% in 2013 for those who said they would be potentially looking to reduce their workforce, which is noteworthy when considering the number of people who responded last year compared to this year;

- No respondent said they would need to cease trading compared to 1% in 2012.

And interestingly, when asked whether they feel automatic enrolment will encourage workers to save for their retirement, responses were similar to those of last year and were again equally divided: around a third (35%) believe that it would, a further third (32%) feel it would not and the remaining third (33%) believe that it might in the 2013 survey.

Karen Thomson FCIPP MSc, Associate Director of Policy, Research and Strategic Visibility at the CIPP, said: “2013 is the year for the payroll and pensions industry with automatic enrolment underway and the imminent introduction of real time information (RTI) reporting.

“We thought it would be extremely valuable to investigate the position of the industry now that automatic enrolment is operational. The findings revealed in our second report on the business readiness of automatic enrolment have been very encouraging.

“Even though around three-quarters of employers have admitted they found the legislation complex, the most likely reason for this is because more organisations are aware of automatic enrolment and are therefore preparing for it. It is also positive to see that more organisations have carried out workforce assessments and are thus better equipped to understand the implications on their business.

“We have been actively involved in lobbying for the simplification of legislative requirements, especially around pay reference periods, and welcome the recent consultation paper from the Department for Work and Pensions that aims to help employers and payroll software providers in meeting their obligations. The CIPP continues to work with the government in trying to make automatic enrolment easier for all employers.

“Furthermore, the Chartered Institute hopes to conduct further research into the lessons learnt during the first 12 months. We continue to be dedicated to providing payroll and pensions professionals the most up-to-date and relevant information, guidance and tools that are much needed when dealing with the complexities of automatic enrolment.”

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