UK - Projected costs of enforcing the auto-enrolment regime were redacted from the Making Auto-enrolment Work Review but are substantial, delegates heard.
Legal & General pensions strategy director and co-author of the report Adrian Boulding (pictured) told the Eversheds pensions conference he was privy to expected costs faced by The Pensions Regulator – the body tasked with ensuring enforcement – but had signed a confidentiality agreement gagging him from revealing the sum.
However, he did admit “the costs are high”, especially in realation to monitoring micro employers.
Boulding said the review was keen to avoid auto-enrolling people into pension schemes to produce very small pots. Therefore, it recommended the threshold for auto-enrolment should be set at income tax – £7,474 in 2011, rising to £10,000. He said the earnings band for contributions would also be set at the NI threshold.
He said this removed 600,000 people from auto-enrolment – saving employers £4m a year in administration costs and £20m a year in contributions.
Boulding also said the review – led by economist Paul Johnson and EEF head of employment policy David Yeandle – was under pressure to exclude older workers and the smallest employers from the regime but resisted.
It did introduce a waiting period of three months, but employees have the right to ask to opt in ahead of this schedule.
“This is happening and it is happening quite quickly. We have a great deal of certainty and clarity of direction from the government.
“The determination from the Department for Work and Pensions is there. Legislative time has been set aside. Now it is time for employers to start preparing. This is good stuff, we all need to save more for retirement.
“Auto-enrolment will overcome the natural reluctance to make long-term decisions. Once in, staff really start to appreciate their employer’s pension scheme.”
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