Auto enrolment pension legislation could cost businesses in the UK billions of pounds in set-up fees and other expenses
UK businesses could end up forking out £15.4 billion in set-up costs alone if they're to meet new auto enrolment legislation.
New research from the independent economic consultancy Centre for Economic Business Research (Cebr), commissioned by Creative Auto Enrolment, reveals there is a high price to pay for taking part in the Government's workplace pension initiative.
Analysis from the newly launched 'Finding your way out of the auto enrolment maze' report reveals small businesses face a set-up fee of £8,900 to get ready for the new legislation.
Small-medium businesses of 100 employees have to pay £12,600, while those with 250 members of staff on their books have to pay £15,600.
At the other end of the spectrum, large companies with up to 500 employees face an average bill of £22,300 for the one-off costs of implementing auto enrolment.
Under auto enrolment, millions of workers nationwide will gradually see some of their wages being automatically saved towards their pension.
Employers must automatically enrol workers into a workplace pension scheme if they are aged between 22 and State Pension age, earn more than £9,440 a year and work in the UK.
They are also obliged to pay into the pension pot as well, with the government adding a little extra through tax relief.
In addition to set-up fees, regional labour costs across the country could make signing up to auto enrolment even more expensive for businesses. For instance, the predicted bill for the largest firms in London is as much as £28,300.
But aside from the costs, businesses must also get to grips with the scale of the task ahead of them.
They face the prospect of completing a total of 33 different administrative tasks ahead of the date by which they must comply with the legislation, while getting ready for auto enrolment could take each business up to 103 man days.
The recurring administration burden, meanwhile, could take over three days every month for some firms.
No businesses can escape auto enrolment, not even those who choose to use the Government's National Employment Savings Trust (NEST).
David White, Managing Director of Creative Auto Enrolment, therefore claims it's important for firms to start thinking about what they need to do as soon as possible.
Planning ahead could make the transition a smoother process, especially when it comes to the preparatory work that needs to be done.
Copyright Press Association 2013