Industry firms face £390m pension bill by 2016

Aaron Morby 11 years ago
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Construction industry pensions provider B&CE is to scrap the annual management charge on its EasyBuild scheme for a year.

The not-for-profit company pledged to lift charges for one year in order to “give back to the industry” as contractors face big pension bills after October 2012.

Under the government’s new compulsory employer duties, all employers are being forced to automatically enrol all eligible employees into a qualifying pension from this date.

B&CE estimates firms will need to sign up as many as 1.2m workers by this date, placing a huge administrative burden on hard-pressed companies.

Based on the current average weekly wage of £532, the sector could be looking at contributions reaching around £390m by 2016.

The bill will soar to £1.17bn by 2018 as contributions increase from 1% to 3% over three years.

Companies that don’t want to run a pension fund – often small firms- will be able to enrol their staff into the government’s National Employment Savings Trust, which is currently gearing up for launch or schemes like B&CE.

Both schemes will boast low industry-beating management fees, with B%CE at 0.5% and the Nest schemes expected to set theirs at 0.3%.

EasyBuild was launched in 2001 and it is now one of the largest group stakeholder pension schemes in the UK, with over half a million members and £670m assets under management.

Patrick Heath-Lay, director of finance and customer development for B&CE, said with auto-enrolment affecting every employer in the UK, the company would do everything it could to help employers.

Heath-Lay said: “We will be offering a 0% management charge for employers and existing customers to help them meet the challenges of auto-enrolment but also to increase participation.”

He said auto-enrolment was just as much a challenge for employers as it was for B&CE as it would bring additional costs and administrative burdens and urged employers to plan early for the changes.

Brian Griffiths, chief executive of B&CE, said: “Our ethos is that we are here for the benefit of the industry. It is vital people save towards their retirement so we are offering no charge on an employee’s pension fund for the first year when auto-enrolment is introduced to encourage employee participation.

“We are committed to keeping charges low, based on cost not profit.”

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