By Francesca James
New research from Group Risk Development (GRiD), the trade body for the group risk industry, suggests one in five (20%) of employers increased their spending on employee benefit packages in the 12 months before the introduction of auto-enrolment.
The first stage of the phased introduction of auto-enrolment of employees into company pension schemes took place in October 2012 with other businesses being phased in from now until 2018. Designed to “nudge” employees into planning for a financially secure retirement, implementation will have major administrational implications for businesses of all sizes but GRiD’s research suggests employers are broadly upbeat with one third (36%) of employers questioned believing auto-enrolment will have a positive impact on their business.
Over a third of employers questioned (36%) expect to meet the additional cost of auto-enrolment without cutting other benefits, indicating the importance they place on their overall benefits package.
Auto-enrolment is currently restricted to pensions but interestingly over half of employers in the survey said they would be open to offering protection benefits (group life insurance, group income protection or group critical illness) alongside auto-enrolment. This enlightened attitude is very encouraging given that employers look set to play a pivotal role in facilitating the distribution of protection products going forwards.
Katharine Moxham, spokesperson for Group Risk Development (GRiD), commented: “Whilst employers have approached auto-enrolment with varying degrees of confidence, a month on from its initial introduction it’s great to see that they are starting to recognise its value and considering further investment in their benefits package accordingly. I’m particularly heartened to see them acknowledge the importance of employees achieving financial resilience prior to retirement as well as afterwards, and the major role protection benefits can play in this.
“Businesses are coming to recognise that they are the ones to facilitate greater personal financial responsibility. The introduction of auto-enrolment is putting the onus on employers to help their employees plan effectively for their retirement but this is only part of the picture. They could potentially play a major role in ensuring their workforce and their families are adequately protected from the financial devastation that death or disability can bring and our survey shows that employers are ready to act on this lead.”