01 August 2012 #Employment
The Department for Work and Pensions (DWP) has recently conducted an Employer’s Pension Provision survey. This tracks the number of people in workplace pensions.
The survey has revealed that only a quarter of private sector workers are active members of their employers’ pension schemes. However, it has also come to light that only three in ten private sector companies offer any pension provision at all for their staff. This figure has fallen from four in ten in the last 5 years.
There is a suggestion that people are not saving enough for their retirement and there is a danger that Britain may be heading to a pension crisis. However, the forthcoming Government auto enrolment scheme (which is launched in October 2013) to give people workplace pensions, will dramatically increase the number of people saving for a pension. It is estimated that 10 million people will be placed into workplace pensions for the first time. However they will be able to opt out if they wish.
Despite the fact the launch of this scheme is so near, the DWP found that half of all the companies it spoke to have failed to think about the reforms. Only three per cent have already put a plan in place. One in six firms said they would wait until the deadline before putting the necessary arrangements in place. The DWP reports that the proportion of companies that are prepared for auto-enrolment is significantly larger among bigger companies. A quarter of all big companies already have their auto-enrolment plans in place, the department said.
It is apparent that there is a need for auto-enrolment reforms, but there is also huge challenge ahead in companies implementing the new scheme. Awareness must be spread amongst small employers to consider what changes they will be required to make in their workplaces, in order to avoid problems once the auto enrolment scheme comes into force.