Almost all company directors are now aware of the requirement to automatically enrol their staff onto a pension scheme which they then have to contribute to, according to research published by the Institute of Directors today.
A survey of over 1,000 members of the institute found that 98% knew what pensions auto-enrolment involved. When the IoD last asked this question, in 2011, 20% of respondents were unaware of the legislation.
Employers' confidence about their preparedness for auto-enrolment varied according to the size of their company, the research found. Overall, 62% of respondents said they were confident they would enrol their staff when they hit their staging date, but this fell to 54% among firms with 49 or fewer workers.
Smaller firms were also less certain about how many of their employers would opt-out of a workplace scheme once they were auto-enrolled. Over a third (36%) of respondents within this group said they didn't know how many people would opt out, compared to 16% of employers with between 50-249 employees.
Generally, however, businesses were more positive about opt-out rates than when the IoD last surveyed them on the issue in 2011. Only 16% of those questioned expect more than one third of their workers to opt out, compared to 36% two years ago.
Malcolm Small, senior pensions policy adviser at the IoD, said: 'Auto-enrolment is a new challenge for business, both in terms of costs and logistics. It's positive that nearly all businesses know that they will have to set up a pension scheme for staff over the next few years, and that most feel ready for it.
'However, we still don't know how small firms are going to handle the burden - nearly half still feel unsure about the process, and many don't know if their staff are going to drop out.'
IoD members were also questioned on their own retirement savings, with 66% of respondents expecting pensions to be their main source of income once they stop working. This compares with 64% in 2011.
However, just 5% of those surveyed said they were happy with how the pensions saving system works, and the research found a marked increase in the proportion of directors whose retirement savings now include other investments (up from 57% in 2011 to 65% in 2013).
Small added: 'While pensions are still the dominant method of saving, our members are increasingly looking elsewhere to provide for their retirement. The rigidity of pensions and poor annuity rates have created resentment among many, who are choosing to supplement their income with more flexible forms such as ISAs.
'Tax relief is still an advantage, but very few believe the pensions system is currently fit for purpose. These figures make the case for radical simplification.'