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ACCA warns over auto-enrolment costs burden

Small and medium sized enterprises will face increased costs and a higher burden of administration because of the workplace pension reforms being introduced in 2012.

The Association of Chartered Certified Accountants says smaller businesses must have time to take on board the changes to the pensions regime and says the Department for Work and Pensions needs to look at ways of reducing burdens on employers generally.

The rules on automatic re-enrolment and employer registration are among the areas where ACCA believes there is scope for a further reduction of burdens.

ACCA is also concerned that employers will level down existing workplace schemes due to the phasing in of minimum employer contributions.

ACCA head of business law John Davies says: “This was a long consultation document, containing a great many policy proposals and detailed drafting material. While efforts have been made to reduce bureaucracy, ACCA is concerned that small businesses in particular will still face substantial burdens. However, staggering the pensions reforms for SMEs between 2012 and 2016 is a sensible idea and will enable SMEs to learn lessons from the experience of larger firms.

“It remains to be seen whether the arrangements will transform pensions provision in the UK. The government estimates that 5 – 9 million people will be newly participating, or saving more, in workplace pensions as a result of the reforms.

“But we are sceptical about claims that the new pension arrangements will persuade so many people who do not currently save for a supplementary pension to do so. We estimate that the number of employees opting out of the new arrangements will be substantially in excess of the official estimates.”

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Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Richard Brown, Managing Director, Moneynotion Limi 6th November 2009 at 4:32 pm

    Compelling people to save unless they opt out is a signally daft idea.

    Granted we as a nation don’t save enough for retirement and never have done. That needs redressing, but the question is how?

    Having said that, the FSA allowed, encouraged and (in some cases I suspect) forced insurers to demutualise, stuck the straightjacket of regulation costs onto products, reducing their effectiveness. Now we have under-performing funds and that lack of performance has been made worse by the current economic collapse.

    As a nation we listened to the consumer lobby which, in my view, knew and still knows little about our industry – and allowed with profits business to all but disappear when it had been fit for purpose historically.

    Now we wonder why people won’t save? Come on!

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