Half a million businesses in the region need to prepare for changes in pension provisions, due to come into place this time next year.
The new legislation – billed as the biggest change to UK pensions provisions in a generation – will require all employers to contribute a minimum contribution of 1% of salaries, rising to 3% by 2017.
Businesses will quickly see the knock on effects of the changes, and Ian Warman, KPMG’s Northern head of pensions is now encouraging businesses to prepare sooner rather than later.
He commented: “The new era of auto enrolment pensions is meant to address the perceived lack of saving taking place across the UK, but there are cost implications for business.
“It will be well worth conducting a serious review of what you need to do now, rather than leaving everything to the last minute.”
Companies with 120,000 employees will be the first to feel the impact, followed by medium sized businesses in 2013. Within four years all businesses will be required to be fully compliant.
Businesses will need to begin to monitor workers at the outset and on an ongoing basis and enrol them automatically into qualifying pensions schemes, as well as integrating HR and payroll.
Ian added: “We are finding that in considering these new requirements employers are fundamentally reviewing how they run their pensions schemes and seeking out new and different ways of delivering pensions that generate offsetting cost savings.
“Most employers will use defined contribution schemes to meet their new obligations, but not all such schemes are the same. For example, some medium and large employers are switching to ‘bundled’ arrangements, where administration and investments are managed by a single third party provider, rather than separate ones, reducing operational costs by 60% or more in our experience.”
By preparing now, businesses can allow time for reviewing and upgrading systems before the go live date on October 1st 2012.