Employers believe they are wasting £5bn a year in pension contributions following the introduction of auto-enrolment, a survey by investment management firm Hargreaves Lansdown has revealed
It also found the scheme risked creating a nation of 'pension zombies' - employees who have no understanding of why they are saving into a pension.
A total of 100 employers of all sizes responded to the firm's poll. Of these, more than two-thirds (69%) said auto-enrolment would not be beneficial for their business in the long term. According to Hargreaves Lansdown, employers believe around half of workers are not appreciative of the £10.7bn companies pays into pension schemes each year. From the employers' viewpoint, £5bn of these contributions are being wasted, it added.
Laith Khalaf, head of corporate research, at Hargreaves Lansdown said: 'Employers already pay huge sums of money into pensions for their staff, and auto-enrolment will only add to the bill. Getting recognition for this should be a top priority, to maximise the benefit the company gets from that expenditure.
'The way to do this is to get employees engaged in their pension planning so they understand what the company is doing for them.'
As workers prioritise more immediate financial needs, employers are willing to only contribute the bare minimum required by auto-enrolment legislation, the research found.
Hargreaves Lansdown said employers would continue to regard company pension contributions as a thankless expense if no attempts were made to help staff understand and appreciate contributions.
It called for more financial education to be offered in workplaces to help staff understand the need to save for retirement.
Khalaf added: 'Offering Workplace ISAs is one way to get staff thinking about saving in a way that appeals to their short and medium-term goals, creating a stepping stone to considering longer term retirement savings.
'By putting in a little effort into this task, companies can make that money go a lot further.'
Employers' auto-enrolment costs are set to increase by £5.5bn, while set up costs are estimated to be £15.4bn for UK businesses, Hargreaves Lansdown said, citing Centre for Economics and Business Research figures.
'This is an awful lot of money for employers to hand over without getting anything in return. Companies need to think how they can use automatic enrolment as an opportunity to get some recognition for their efforts,' Hargreaves Lansdown concluded.
