Creative Benefits has warned that UK companies will throw away £2.1bn a year as a result of the Government’s automatic enrolment reforms.
The employee benefits consultant says over four million private sector employees, or 20 per cent, will not benefit from pension saving because they either have pressing debt obligations and should opt out or could get the same income from the state at retirement by not saving.
Development manager David Marlow says if everybody remained in auto-enrolment, the total cost to businesses would be about £10.5bn a year.
Marlow says 20 per cent of that expenditure, or £2.1bn, would not provide good value for money.
He says: “We have serious concerns about the cost of auto-enrolment on British SMEs. We are not against auto-enrolment as a policy because there is a massive savings gap in the UK but in our view a lot of people will potentially get poor value for money.
“Auto-enrolment is a blanket approach and because there will be a lot of apathy from consumers, people will not be making informed decisions. Lumping everyone into the same scheme is extremely dangerous.”
AWD Chase de Vere head of communications Patrick Connolly says: “I think auto-enrolment has the potential to work very well for the vast majority of people.”