UK businesses are facing £15.4bn in set-up costs if they’re to meet the requirements of new auto enrolment legislation, according to new research from the independent economic consultancy Centre for Economic Business Research (Cebr), commissioned by Creative Auto Enrolment.

 

Analysis from the newly launched ‘Finding your way out of the auto enrolment maze’ report reveals small businesses[1] face a set up fee of £8,900 to get ready for the new legislation. This figure rises to £12,600 for small-medium businesses of 100 employees and £15,600 for companies employing 250 people, while at the other end of the spectrum large companies with up to 500 staff are facing an average bill of £22,300 for the one-off costs of implementing auto enrolment. Regional labour costs across the country could see these costs pushed even higher, with the predicted bill for the largest firms in London hitting £28,300.

 

In addition to the significant cost impact, businesses must also get to grips with the scale of the task ahead of them, and are faced with completing a total of 33 different administrative tasks ahead of the date by which they must comply with the legislation[2]. The report finds getting ready for auto enrolment could take each business up to 103 man days, with the recurring administration burden taking over 3 days each month for some firms.

 

Even those businesses who choose to use the Government’s National Employment Savings Trust (NEST) will face these costs and administrative challenges as first they need to complete all the preparatory work, while the legislation will effectively see small and medium sized business owners, who may have little to no experience in the field of pensions, having to tackle the huge responsibility of choosing an appropriate pension scheme for their staff.

 

The report is available for download here

 

[1] Those with one to four employees

[2] Each business has its own ‘staging date’, the date by which it must comply with the new legislation. These dates are determined by the number of employees in each firm