UK - The National Employment Savings Trust (NEST) could be overwhelmed by demand, a new report by consultancy Hymans Robertson has predicted, after finding almost one in four employers are expecting to implement auto-enrolment reforms within six months.
The six-month window is significantly shorter than the 18-month timeframe recommended by a number of experts to date, leading the consultancy to warn of a "huge stampede" on the low-cost, defined contribution scheme established as part of the UK's auto-enrolment reforms.
Lee Hollingworth, head of DC at the consultancy, said that with 600 of the country's largest employers preparing to auto-enrol staff by October 2012, it would see around a third of all employees enter the regime at once.
"The fact the vast majority of decision-makers at the UK's largest employers grossly underestimate how long it will take to get ready implies they plan to leave it to the last minute, which means we are heading for a car crash," he said, adding that 68% of employers said it would take them 12 months to prepare for the change, while 39% believed they would need half a year.
He stressed that both the Department for Work and Pensions and the Pensions Regulator needed to guarantee more employers were aware of looming deadlines.
Hollingworth said the pressure put on NEST could end up being detrimental to the smaller employees for which the scheme was intended.
"The demands of large employers could represent a serious risk to NEST being able to deliver to its target market," he said.
The research, conducted in April, surveyed human resources and finance directors at 5,000 employees in the UK.
In other news, a survey of trustees shows that more than half intend to increase employer contributions following the next scheme valuation.
According to Pension Insurance Corporation (PIC), 55% of respondents were considering increasing contributions for employers by 10%, while 11% of respondents sought a 20% increase in payments.
David Collinson, co-head of business organisation at PIC, said employers and sponsors had come to expect increasing contributions as worse-than-expected triennial valuations were revealed.
"The fact that many funds have not fully matched their liability risks only heightens the chance that further increases to contributions will be needed from the sponsor in the future," he said.
However, the survey also noted that 70% of trustees did not think their assets were currently well matched with liabilities, despite an overwhelming majority saying they were satisfied with the investment advice offered by advisors.
Finally, pension administrator Atkin & Co has claimed that many medium-sized UK schemes are not evaluating their fee structure often enough, resulting in higher-than-average fees.
The company said that while large schemes had the resources to regularly review fee structures, smaller schemes were more likely to approach fees cautiously and therefore review services often.
The company added: "It is the experience of schemes outside of these two extremes - those in the middle range - which varies to a surprising extent."
Marian Elliott, director at Atkin, therefore urged medium-sized schemes to review arrangements over fee structures, as well as the agreements with advisers, on a more regular basis.
"This doesn't necessarily mean changing advisors every few years, but it does mean testing the market so trustees have a regularly updated yardstick with which to assess the annual fees being incurred by their scheme," she said.
Elliott argued that regular reviews did not damage relationships and in fact had the opposite effect, as the advisers felt they were given the opportunity to explain their approach, while highlighting how their services added value to a scheme.