SMEs that have signed up to the government-backed NEST pension scheme ahead of the rollout of auto-enrolment are reporting a strong take-up among staff.

While auto-enrolment becomes a legal requirement for the largest firms from October this year, small and medium-sized companies with 250 staff or fewer will only start being required to provide a pension scheme from 2014 onwards. One of the great unknowns of the reform is how many employees will remain in the pension and not opt out, especially in smaller firms where bosses may be ambivalent about the changes. Estimates have varied from as low as 50 to as high as 90 per cent.

However, the appetite for pension saving among smaller firms may be much greater than previously thought, evidence from the SMEs who have signed up early for NEST has suggested. Many are reporting 80 per cent take-up and above.

Technology company Fluidata, which has a workforce of 47, previously had a pension that was taken up by only 10 per cent of employees. Since signing up with NEST and adopting an auto-enrolment model in February, participation in pensions is now riding high at 90 per cent.

“We have a young workforce and a lot of them hadn’t considered joining a pension scheme in the past – they are 30 or 40 years away from retirement and so it just wasn’t something they had thought about,” said Nisha Minhas, Fluidata’s HR manager. “There is a lot in the media about pensions these days so awareness is rising, but I think this has still prompted them to join a pension scheme a lot earlier than they otherwise would have.”

Minhas said that the process of auto-enrolling had proved “relatively simple” with employees given NEST literature to explain the scheme and then using a web module to make decisions at the click of a mouse. One factor in its popularity may be that the company has opted to put in a contribution of 6 per cent, significantly more than the minimum.

By contrast, door and window company VBH have decided to start with the minimum contribution of 1 per cent, but nevertheless has had 78 per cent of eligible employees signing up to join the scheme. VBH, which has 68 employees, decided not to auto-enrol staff at this stage but to give presentations at all four sites about what was on offer and then leave employees to make their choice.

Jan Weaver, VBH’s HR manager, said: “Our staging date is not until July 2014, but knowing that it was there on the horizon, we began investigating it and decided there was no reason not to sign up early. By starting early and low, with contributions at an affordable level, we feel it helps those enrolled get into the savings habit – we can perhaps increase those contributions as time goes on.”

Around 15 per cent of joiners had decided to put in more than the scheme minimum, said Weaver. She said that while she worked closely with her finance director in making the early decisions about the scheme, she had now taken sole responsibility for its administration, and said that it should not be too onerous for most HR people even if they have limited experience of pensions.

Fluidata and VBH are two of the 100 or so smaller firms who have signed up for NEST via the ‘volunteer programme’ which has helped the provider fine-tune its offering in advance of auto-enrolment. NEST is also working with 60 larger employers and has an estimated 1700 members so far.

Tim Jones, chief executive of NEST, said: “We want to help people across the UK understand that tomorrow is worth saving for and how NEST, as a low charge and easy to use pension scheme, can help them to do that. We’ve already started to turn this into a reality for thousands of people whose employers have joined us ahead of automatic enrolment and we look forward to working with many more in the years to come.”