Research by the Association of Consulting Actuaries show two thirds of employers with no pension schemes has no plans to offer auto-enrolment facility to workers.
The survey also revealed the extent to which employers are yet to understand the legal requirements coming into force next year when the National Employment Savings Trust (NEST) rolls out the auto-enrolment facility and exposed a visible danger of more leveling down.
The survey Pension Trends also found 28 per cent of the 468 respondents are still ignorant of the dates when they must auto-enrol workers into a workplace pension scheme.
ACA research also shows one third of large employers are looking to cut spending on pensions contributions, while a little over one in four revealing they have already made budgets for auto-enrolment contributions. However, the proportion fell to one in seven for employers with 49 or fewer workers.
Also 21 per cent employers reported employees opting out of workplace pension schemes have grown over the past three years, the survey revealed.
With auto-enrolment ready for staging by next year onwards, employers should be preparing for higher expenses, ACA observed.
On average, companies made provisions for pension expenses assuming 25 per cent employees would opt out of workplace schemes after the introduction of auto-enrolment scheme, with the smaller employers putting the estimate at 30-40 per cent, the report said.
“With not much more than a third of private sector employees now in pension arrangements and with many of these set to deliver very modest retirement incomes, the survey findings are disappointing in terms of the need to boost rather than diminish retirement incomes into the future,” said ACA chairman Stuart Southall.
“There has always been the risk that employers may ‘level down’ their pension provision as a result of the 2012 reforms.This is why we have consistently called on the government to give employers more flexibility around the new rules to minimise the administrative burden and reduce the risk of ‘levelling down,” said Darren Philp, director of policy at the National Association of Pension Funds (NAPF).
“We urge employers to continue to provide good quality workplace pensions. By doing this, they will reap the benefits of providing a benefit that is highly valued by their employees,” he added.