Will pension compliance cost you 10% of payroll?
Auto-enrolment could increase employers’ payroll costs by 10% according to research from Eversheds.
The legal firm surveyed 245 companies and found that more than half thought the cost of complying with the new pension rules would be as high as 10% of payroll. The biggest challenge was though to be the additional administration required.
Nearly 60% of those surveyed said they wouldn’t reduce costs by limiting future pay rises. However 16% said they would consider it.
On a positive note the 93% were confident they would be ready by their staging date.
Two of the biggest challenges were getting key messages over in simple terms and getting workers to understand the reasons behind automatic enrolment.
About a third of companies thought it likely that they’d have to communicate different messages to different categories of workers.
When asked the one thing they’d change 41% said they’d allow workers to opt-out before being enrolled. Another 20% wanted the earnings threshold to be removed from the eligibility criteria, so that employers would not have to continually monitor workers’ earnings.
Steve Clark