South East: Auto enrolment pensions too costly for employers, says Close Brothers

Nearly a third of business owners in the South East are not in favour of auto enrolment pensions according to results of the latest Close Brothers Business Barometer. 

The quarterly survey, which aims to gauge the sentiment of SME owner managers on a range of issues that affect their business, highlighted that many business owners do not feel that the legislative requirements will provide realistic returns.

A third of firms in the region believe that employees will choose to opt out of the scheme anyway due to financial constraints.

The survey further revealed that nearly half of business owners in the South East feel that the new requirements will prove too costly for employers to fulfill at a time when many businesses are focusing on making ends meet.

Michael Cox, regional sales director for Close Brothers Invoice Finance in the South East, said: “It is clear that many SME owner managers are not seeing the value in auto enrolment. Many feel that it is an additional cost at a time when UK businesses can least afford it.

“There does appear to be a level of reluctance to embrace the legislation, with many employers believing that their staff will choose to opt out anyway.

“The financial squeeze remains a key obstacle to retirement saving and we are right to be concerned that many are not saving enough for their twilight years.

“However, the survey also showed that many employers are in favour of the legislation with a third of those surveyed in the South East believing it’s important because they care about their staff and think it’s vital for them to plan for their future.”

The barometer also revealed that of those firms that are backing auto enrolment pensions, 73% think that as people are living longer, it is a prudent measure, helping to ensure people can afford to live comfortably in retirement.

Meanwhile, a fifth of those in agreement believe that the new requirements will lead to a happier working environment by providing employees with a greater feeling of security.

Cox said: “With the UK’s aging population, it is imperative that employers and employees alike take the time to plan for the future, despite the current economic situation.”