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The Actuary The magazine of the Institute & Faculty of Actuaries
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Business leaders failing to plan for compulsory contributions

A survey from BBS Consultants & Actuaries has found that new legislation, including the introduction of compulsory employer pension contributions, will be the challenge that gives employers the biggest headache in 2011.

And at the same time extra contributions must be paid, the pressure is also on among employers to reduce spiralling pension deficits, the firm says.

The survey found that almost a quarter (24 per cent) of respondents reported dealing with new legislation such as compulsory pension contributions, as their biggest pensions challenge for the year ahead.

Compulsory contributions are part of auto-enrolment, a Government scheme that will compel all employers, regardless of size, to offer employees membership of a pension scheme.

"Anecdotally we’ve known that businesses are not geared up to meet the requirement to pay compulsory employer pension contributions which will start to come into effect from later this year," said BBS director James Stanfield.

"What the results of this survey do is back up that anecdotal evidence with stark statistics which underline how under-prepared businesses currently are to deal with this new legislation."

A further 23 per cent viewed controlling risk and implementing appropriate investment strategies as their biggest challenge, while 22 per cent said managing costs and, in particular, pension deficits, was their number one priority for 2011.

The survey also found that 16 per cent of respondents rated maintaining member benefits and avoiding having to call on the Pension Protection Fund as their number one challenge, with member communication (9 per cent) and resolving historic benefit errors (6 per cent) cited as 2011’s number one concerns for respondents.