How much does auto-enrolment cost?

Living wage

The new living wage will make auto-enrolment more expensive

If you are a small company, one of the unexpected items you’re going to have to add into your financial plan for the next three years is the additional cost of pensions.

The new Living Wage means that the contributions for many employees are not going to be absorbed into the wage bill, they may well be paid on the new living wage.

If you’d like to do some modelling on the cost to your organisation on your current payroll, you can now do so for free. Go to and do a workforce assessment. We’ll throw in a full “download and keep” report.

Model the extra pension costs of the Living wage here

We’ve already had employers modelling on current earnings and revised earnings using the new living wage.


Historical assessments no longer relevant

The contribution costs will become business as usual, but there are additional costs of auto-enrolment to do with setting up and managing leavers , joiners, opt ins and opt outs.

In their initial impact assessment, the DWP estimated these costs as follows;-


We have asked the head of the DWP, Charlotte Clark, whether these figures hold true. Her response is that the DWP are revisiting these figures and will be publishing the revised costs based on actual data and revised projections for the smaller firms.

In the meantime there has been  research by Creative Benefit Consultants and the Centre of Economic Business Research. I have written about this work here, expressing concern that the £15bn bill to business, it suggested, was alarmist.  CBS reckoned that typically a medium sized employer would have to commit 300 man days to setting up auto-enrolment.

The problem with this research, (as with the DWP’s work), was that it was based on the world as we knew it (the CBS report was published in 2012). Since then, the costs of auto-enrolment software has plummeted and the cost of assessments , selection and implementation is falling all the time.


Add your data to the Pensionsync/Clacher survey here.


Equally importantly, none of the earlier studies looked at the ongoing cost to those employers, their payroll bureaus and accountants who they will be increasingly relying on.

So I’m really pleased that our friends at pensionsync have dug into their own pockets  to gain a snapshot of recent experiences of staging and processing and teaming up  with Dr Iain Clacher from the University of Leeds to undertake a research project into the current costs of automatic enrolment.

The survey is called Automatic enrolment: the payroll perspective. You can access it here (until 8th August 2015, when it the survey will close):

The more experiences that they can collate from bureaus and accountants the more relevant the results that will be available for everyone, so please highlight the survey to your clients and contacts.

All participants will receive a free copy of the report and the results will be generally available in the autumn – in time for the bulk of stagings that will be upon us from 2016.

Dr Iain Clacher

Dr Iain Clacher


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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