New research issued by NEST has suggested that one fifth (21%) of large employers in the private and not-for-profit sectors are quite or very likely to use NEST for some groups of auto-enrolled workers, with around 16% undecided. The majority of these large employers said they would use NEST alongside another schemes.
There is a lot of different research into which providers employers plan to use for auto-enrolment, but one overarching theme is that the majority of employers are looking to expand the use of their existing provider to all their workers. However, PwC warns market capacity may not support this. Now that employers have to auto-enrol their whole workforce for the first time, they may not be able to use their first choice of pension provider.
Peter Woods, partner in PwC’s pensions practice, said:
"Despite the first wave of automatic enrolment fast approaching, there continues to be considerable uncertainty over which providers employers will choose to use, especially the 4,000 or so who must comply between Easter and Christmas 2013.
"With so many employers saying they want to stick with their existing provider, we are already seeing some providers closing their doors to some employers. This has left some employers unable to use their first choice of scheme and having to think again.
"One reason for employers staying put is that they hope to receive considerable administrative support from their existing pension provider with the ongoing assessment of workers. This argument is diminished when employers later realise that much of this activity has to be done within the payroll function.
"Given these factors and the unpredictable nature of the current market, we're encouraging all employers complying in 2013 to move quickly to assess in detail what's the right scheme for them and then settle arrangements early with the provider to avoid disappointment."
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