Seven in ten (70%) employers are being financially squeezed by auto-enrolment costs according to a report by the Chartered Institute of Personnel and Development (CIPD).
Its Labour Market Outlook: Focus on employer attitudes to pay and pensions report found employers' dealt with the additional cost of auto-enrolment by either taking lower profits or absorbing costs (21%), paying the statutory minimum pension contributions for automatically enrolled staff (15%), or reducing or stopping wage growth (10%).
The research of 1,007 HR professionals and employers through both the CIPD membership and YouGov between 4 December and 24 December 2015 revealed small and medium-sized employers (SMEs) were more likely to cope with the cost of automatic enrolment by accepting lower profits (32%).
These firms would probably become less profitable, or seek to recoup the cost through pay.
However, almost three-fifths (58%) of respondents reported they had not noticed any change in their spending and saving as a result of auto-enrolment, taking into account that some may only have contributed the legal minimum to pensions.
Pension contributions accounted for an average of 9% of total pay and benefit spend among employers. This ranged from 7.31% in the voluntary sector to 13.52% in the public sector. However, a surprising number either didn't know (36%) or their employer did not collect or analyse the data (10%).
Private sector roles in manufacturing (10.68%) and finance (10.58%) employers were among those spending the most on pensions. Those in wholesale, retail and motor trades (8.32%) and social care (8.20%) spent the least.
In terms of the default retirement age, employees expected the average age at which they retired was going to be 66 with those aged 24 or below believing they would retire at 67. Those aged 55 and above expected to leave work at 66.
Less than one in five (18%) employers said over-60s currently accounted for at least 15% of their workforce with 28% of employees predicting the same by 2020.
The report follows CIPD's Employee Outlook: Focus on employee attitudes to pay and pensions, which found just one third of 18-24 year-olds are in a workplace pension.
Newton’s Curt Custard considers the investment outlook for 2021 and the implications for DC schemes
Nearly every trustee is confident of the next stage in their scheme’s strategy, despite almost an equal number being forced to consider replacing plans within the prior 12 months, according to research by Barnett Waddingham.
Master trusts’ investment strategies have grown and become more sophisticated over the last three years, but “growing pains” are hindering progress, according to the Defined Contribution Investment Forum (DCIF).
Companies could be overstating their pension liabilities by up to £60bn due to their life expectancy assumptions, according to XPS Pensions Group.
Defined benefit (DB) schemes that provide GMPs must revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that have been calculated on an unequal basis, a landmark court judgment said last week.