A “capacity crunch” facing auto-enrolment business pension providers could create headaches for Yorkshire companies, according to a wealth management business.
Pearson Jones said the vast amount of businesses due to be “staged in” for auto-enrolment may lead to providers having to close their doors because they cannot cope.
The warning follows a new report issued by the Pensions Regulator which shows that around 3,670 companies have been auto-enrolled in the last 15 months.
Around 4,000 medium-sized firms need to be auto-enrolled this month and in February.
Pearson Jones investment and deputy managing director Peter Heckingbottom said: “These figures indicate the scale of the challenge and potentially serious consequences for Yorkshire businesses. Introducing auto-enrolment is a complex development.
“Businesses will have the difficult task of complying with the auto-enrolment regulations at a time of unprecedented demand for the services of pension providers and advisers.”
The report from the Pensions Regulator also reveals that, although 2.2 million people have already signed up to a pension under auto-enrolment, more than three million are too young, too old or do not earn enough to qualify.
Auto-enrolment started in 2012 with larger firms. The reforms aim to boost the number of people saving for their later years.
Smaller firms with less experience of pensions are also involved in the reforms. Concerns have been raised that they will place workers into old and high-charging schemes. Charges in schemes set up before 2001 are around 26 per cent higher than those set up since.
Consumer group Which? says 35 per cent of people have opted out of auto-enrolment, or plan to opt out, with many doing so because they do not trust the pension industry to look after their money.