Auto-enrolment could hit small business snag

A Department for Work and Pensions (DWP) report, polling a range of the UK’s smallest companies, has revealed those not offering a pension “mainly” do not because staff are unwilling to sacrifice salaries for savings.

The document raises serious questions about plans to autoenrol all UK employees into workplace schemes, starting in 2012, and create a National Employment Savings Trust (Nest) for firms unwilling to use private provision, giving members the right to opt out of the arrangement.

Respondents to the research cited reasons such as staff needing “every penny they’re earning” for the attitude.

The 186-page report The information needs of small and micro employers at auto-enrolment states: “The overall picture to emerge was that small employers who do not offer pensions mainly pointed to the fact that, in their experience, workers did not want a pension scheme if they had to contribute to it.

“Employers in a wide range of sectors, and in different sizes of small organisations, reported this view.

“In other cases, employers had offered pensions to their staff but had found no interest and they had therefore put the issue to one side.

“Some were disinclined to investigate pensions in any depth, or pay for advice on the issue, in case staff would then just turn down the opportunity. They regarded that as a waste of money.”