The cost of auto enrolment revealed

Businesses are facing set-up costs totalling £15.4bn to meet the requirements of auto enrolment (AE) legislation, a new report from the Centre for Economic and Business Research (CEBR) has found.

The report, commissioned by Creative Auto Enrolment, says AE will cost SMEs up to £28,300 per business and take up to 103 man days to prepare for.

The CEBR found the set-up costs “punitively high” at £8,900 for small businesses, £12,600 for businesses with up to 100 employees, £15,600 for up to 250 staff, and £23,300 for those with 500 people. The largest firms in London will face a bill of £28,300 to be compliant with the legislation.

David White, managing director of Creative Auto Enrolment, said...

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Comments
jon_griffey's picture

Son of RTI    1 thanks

jon_griffey | | Permalink

Someone from our office went on an IRIS Auto-Enrolment seminar yesterday.

From what they were saying it looks like a bl**dy nightmare that makes RTI look like a picnic.

Have to Agree.........

Kazmc | | Permalink

We had a meeting with a pension provider recently regarding our 300+ clients payrolls and I have to say I think it will be an even bigger administration nightmare than we have encountered with RTI.

Buy now ......    1 thanks

P&G | | Permalink

Quite agree with both Jon and Kazmc, this is going to make RTI look like a walk in the park.

One area where I think CEBR have underestimated impact is in respect of financial adviser's input. Whilst the very smallest (less than 5 employees) businesses will only have limited choice those with five or more will definitely need financial advice as the legislation specifically states that the employer must choose a scheme that is right for the business and its employees. Simply opting for NEST, NOW or Peoples Pensions is not an option.

Courtesy of RDR at the start of 2013, the number of advisers has fallen. If you say that half the 20,000 or so advisers will be working on Auto Enrolment then the 1.26 million businesses stated in the report works out at 126 schemes per adviser over the next five years. CEBR quote a one off burden of up to 103 days per scheme,well even if we put adviser time at 10 days per scheme that will still make every adviser fully occupied for the next five years! The smallest businesses will eventually be staging at rate of over 100,000 per month, there simply will not be enough hours in the day. 

Only answer is buy now while stocks last!!

No shit sherlock

The Black Knight | | Permalink

No shit sherlock

I think it is seriously time to consider getting rid of staff.

Where on earth do they think a small business is going to find that amount of cash to spend on admin? and I was thinking of £1,500 not the figure they are quoting above.

IFA salesmen are filling their boots.

viable solutions are

1, outsource (to india)

2, only employ child tax credit supplemented part time employees on the NMW (tesco NIC free scheme style)

3, make all employees self employed.

4, force all employees to use ltd company or umbrella companies

5, incorporate and accept that to comply or not comply will result in insolvency

6,use the crap NEST thing , but i think you are still liable to pay for the IFA advice to the employees that you are not able to give, and now costs a fortune under RDR

7, cease trading

All this on top of being forced to give a pay rise in a recession (I do not want a sales call selling a salary sacrifice scheme)

The easy and workable way was to have said, you need a personal pension plan for your employer to pay in to and their contributions must be.... and yours must be at least.....

Why do these people exist to sow unworkable complexity their help to the UK economy is treasonable.