Quarter of pension schemes unfit for auto-enrolment

Capita's survey of 133 organisations, which runs 200 schemes managing £180bn in assets between them, found that 14% of schemes failed the qualifying test for auto-enrolment.

For a further 11% of schemes, employers were unable to say whether or not their schemes were compliant because they have not yet carried out tests.

Among defined contribution schemes, the non-compliance level rose to 24%, with a further 9% unable to tell if they met auto-enrolment criteria.

Capita Hartshead senior consultant for actuarial and consultancy services Phil Daniels said: "It is a matter of some concern that, this close to the start of automatic enrolment, a sizeable minority of schemes are believed to be either unsuitable or untested.

"From our experience many employers have made a start of assessing schemes but have then realised that the process is rather more complicated than first thought."

Daniels added that some employers believe they are already compliant but have actually been using incorrect salary definitions in their calculations.

The majority of employers expected good take-up rates for auto-enrolment, according to the survey.

Almost seven in ten employers operating defined benefit schemes expected no opt-outs at all, whilst 23% anticipated an opt-out rate of 20% or less.

Employers running DC schemes were less optimistic. Around half expect opt-out rates of between 20% and 49%, while a third expected a rate of 20%.