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PwC: thousands of employers unprepared for auto-enrolment

PwC: thousands of employers unprepared for auto-enrolment

Lack of time and clarity means hundreds of thousands of employers will be unprepared for auto-enrolment next year, PriceWaterhouse Coopers (PwC) has predicted.

PwC has warned of a ‘tremendous strain’ on employers payroll and human resources (HR) capabilities when auto-enrolment reforms kick in later next year. It said employers were not prepared for the ‘enormous administrative cost burdens’ the reform will generate and the government had underestimated the impact.

Peter Woods, partner in the pensions practice at PwC, said: ‘Getting the preparations right will save damaging repercussions later, with worse case scenarios including different people’s contributions being muddled up.

‘Success will depend largely on whether payroll and other systems providers are ready in time and this is likely to be challenging, particularly given the final auto-enrolment legislation is yet to be published.  For instance it’s still not 100% which employees will be excluded from the reforms.’

Woods said pension providers will not be ready for the first, and largest, employers until the late summer.

‘This leaves little time for essential configuration by individual employers,’ he said.

PwC said the government's estimate of an average £6,000 per employer for administrative costs seemed ‘far too optimistic’.

Bill Galvin (pictured), chief executive of The Pensions Regulator (TPR), announced yesterday that Capita had been appointed to manage communications between employers and the TPR.

Speaking to the Confederation of British Industry, Galvin said 600 employers would join in the first six months from October 2012. He said they were employers TPR has already been working with and who should be ready to comply.

However, he warned that while 60% of larger employers were beginning to make preparations a significant minority had not.

‘One of the more concerning figures is that 12% of large employers said they would leave it as late as possible before thinking about how to comply,’ said Galvin.

‘And almost half of micro employers said the same. Encouraging timely engagement with the reforms is a particular challenge – and a situation we need to be very aware of.'

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