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24 Jun 2013

Auto-Enrolment Could Cause Problems For Small Firms, Pension Industry Says

Despite the positive feedback from the initial stage of the automatic enrolment scheme and the low opt-out rates, there is still a lot of work to be done to ensure that similar smooth adoption would be achieved by small firms, according to several pension industry groups.

The National Employment Savings Trust (Nest), the Confederation of British Industry (CBI) and pension providers have shared their view on the successful implementation of the following stages of auto-enrolment.

According to Tim Jones, chief executive of Nest, companies with thousands of employees are very different from those with a few hundred or less. Whilst large businesses have established pension strategies and experienced in-house human resource teams that can provide favourable conditions from reputed providers, medium and small companies often lack the resources to provide such services to their workers, he said.

Lena Tochtermann, CBI principal policy adviser, added that certain businesses have been struggling with preparations for auto enrolment, even when working with top providers. She claimed that the government should change regulations for small pots as a measure to facilitate adoption. Tochtermann also proposed that a cap to pension scheme charges should be introduced, as well as providing quality benchmarking for schemes.

Meanwhile, pension providers stated that although auto-enrolment has already started, there were a number of unfinished and “at trial stage” policies just months prior to the next stage, Citywire website reported.

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