Nest proposal doesn't fly with smaller firms

Department for Work and Pensions (DWP) research has revealed the bulk of companies currently offering a scheme aim to auto-enrol staff into it, rather than take up the state-sponsored alternative, while even businesses without pensions are “typically unsure” they want Nest.

And the report further highlights small and medium-sized enterprises’ (SME) long-standing fears over the potentially crippling costs of enforced auto-enrolment.

According to the 124-page document: “Employers that currently offered a scheme with employer contribution typically thought they would continue to use their existing scheme, rather than changing to a different provider.

“Even employers who had a scheme but made no contributions towards employees’ pensions generally thought they would continue to use their existing scheme… Most saw no clear reason to switch to Nest.”

Reasons given included companies “struggling” to cope with the fallout from the recession and widespread scepticism about the government’s involvement.

The report added: “Employers typically felt it was unfair that the administrative and financial burden should fall upon them, as they would then have the administrative task of organising the scheme, or would need to pay someone to do the job for them.”

The report comes on the heels of a DWP-appointed review body, charged with reviewing the financial viability of the 2012 reform programme.

Last week PW revealed this panel, headed by Paul Johnson of the Institute for Fiscal Studies, would have even wider powers than announced, with a remit to look at state pension provision too.