By Daniel Hunter

Auto enrolment advisers believe a growing number of pensions providers will not offer their auto enrolment schemes to businesses with fewer than 30 employees, according to research conducted by financial research Defaqto on behalf on NOW: Pensions.

More than three quarters (77%) said they anticipate the number of pensions providers not offering auto enrolment to smaller firms to rise.

Of the 248 advisers questioned by Defaqto, a third (33%) already believe there isn’t enough pension provider choice for employers implementing auto enrolment with 82% claiming that providers have been cherry picking auto enrolment business.

Of the auto enrolment schemes that advisers have written so far, guaranteed acceptance was the most important factor cited by nearly a third (30%), closely followed by the level of charges cited by 29%.

Looking ahead, over two thirds 67% of the advisers surveyed expect to see a growing number of pension providers introducing an employer charge for auto enrolment, with 69% claiming that a charge would not necessarily deter them from recommending a scheme.

Morten Nilsson, CEO, NOW: Pensions said: “Auto enrolment is working but its biggest challenge is yet to come. Owners of small firms will have little or no experience of pensions and will be fitting auto enrolment in around their other day to day responsibilities. These firms are going to need considerable help both setting up their schemes and with ongoing administration.

“For many providers, the effort involved with administering these schemes won’t be worth it. Widespread cherry picking is already occurring but as smaller firms reach their staging dates, it’s like that growing number of providers will close their doors altogether."