UK - Only one in fifty UK companies plan to use the National Employment Savings Trust (NEST) as their vehicle for the upcoming auto-enrolment pensions regime, a survey by Aon Hewitt has found.
The consultancy said only two percent of the 110 respondents from its survey on planned action connected to the introduction of auto-enrolment said they planned to use NEST. The firm polled clients employing between 100 and 30,000 employees from a wide range of industrial sectors.
James Patten, benefits design specialist at Aon Hewitt, said: "Our survey confirms many of the views expressed to us in conversations with clients.
"In our experience relatively few organisations of more than around 100 employees are expecting to adopt NEST for auto-enrolment purposes."
Where possible, it seems many companies prefer to use pension vehicles they already operated in order to limit the change they would need to make, he said.
The survey also looked at how companies were planning to design defined contribution (DC) schemes for staff auto-enrolled into pension arrangements.
None of the organisations expected to cut contribution rates for existing pension savers, Patten said, noting some had still not made a decision on this.
But nearly all respondents that had decided about contribution rates said they expected to give new staff access to the same DC contribution structures as those already saving - as long as they were prepared to make the necessary contributions to save for retirement, he said.
He warned that some reluctance to make changes could prove costly. "A significant majority of those that have reached a view on their likely contribution structure are intending to use their existing DC contribution scales for auto-enrolling all employees," he said, noting this may be to limit the amount of work.
"However, it could lead to the risk of substantially higher costs to the employer, compared with if they had set up an introductory contribution scale for those being auto-enrolled at the minimum employer contribution rate of 1% of qualifying earnings - which will not increase before October 2016 at the earliest," Patten said.
The survey also showed that about 67% of respondents had still not considered the implementation challenges of auto-enrolment in any detail; and only 4% were likely to have made significant progress on this, Aon Hewitt said.
NEST's chairman of trustees recently told a parliamentary committee that he did not anticipate that the announced delay of auto-enrolment for small and medium sized enterprises would damage the scheme.
In other UK news, Wirral Borough Council, which administers the £5bn (€6bn) Merseyside Pension Fund, is tendering for consultants to join a list of eight to work on investment manager selection.
In an official tender notice, the local authority said it intends to set up a framework agreement with a maximum of eight parties.
The agreement is seen as lasting for three years, with the option of extending it for a further three years, subject to satisfactory performance.
In line with best practice as outlined in the Myners Principles, the council said the pension fund separates roles for consultants.
This means any consulting firm already advising the fund about investment strategy, asset allocation or its funding position will not be eligible for inclusion in the framework, it said.
The council said it sees a number of investment manager searches happening over the next six years. "Service providers who will support this process will be called-off as appropriate over the life of the framework, which is initially for a three-year period," it said.
Submissions should be made via the council's ePortal by the end of January next year.