Another quick post arising from my review of the parliamentary committee debate on The Pensions Bill last week.
I have been delivering presentations regarding NEST and Auto-enrolment since the middle of the last decade. Throughout this period, and even today, I still hear many employers (and even some in the pensions industry) suggesting that auto-enrolment will not work. It appears to be a case of interested parties being ‘in denial’, rather than face the realities of cost.
The rationale for the assumption that it won’t work is generally along the lines of:
‘If the employee has to pay, the employee will opt out.’
This may turn out to be the case, but I suspect not. All the evidence shows that auto-enrolment is likely to make a massive dent in the numbers saving for retirement. Which brings me back to a rather neat quote from the debate last week (12/07/11), from the Labour Spokeswoman on Pensions, Rachel Reeves MP:
‘In New Zealand there is a similar automatic enrolment programme called the KiwiSaver, which now has 1.6 million members. Some 45% of it’s members said that they would not have signed up if it had not been automatic, and 38% said they would not otherwise be saving.’
Whilst we don’t know just how succesful auto-enrolment will be, it is fair to assume that many more employees will remain in pensions than opt-out. Failure to appreciate this reality could come as a nasty shock to employers who budget for minimum joiners.
A final point. As recently as two years ago, many of those in denial re auto-enrolment were predicting that this legislation (Auto-enrolment and NEST etc) would not come to pass. Yet auto enrolment dates are now set, and NEST is a reality.
Point made I hope?
Best regards
Steve
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