HR REWARD AND BENEFITS
c Even a successful
trees, and so what we pay out has
to come from somewhere
Tom McGuiness/Premier Choice Group
around 20 contribute outside payroll, without making regular contributions.” There is no trend towards removing pensions from flex
schemes to avoid perceived potential administrative problems with linking to auto-enrolment. Thomsons Online Benefits’ Gregson says: “All flex and pension providers should have the capability to link to auto-enrolment, but some are better prepared than others.” Because some pensions allow you to flex up, leaving them
within flex can have the beneficial effect of encouraging contributions at above the auto-enrolment minimum requirement. Nevertheless, a small minority of pensions also allow you to trade down and it is essential these are not allowed to enable people to flex below the auto-enrolment minimum. Failure to change them could result in falling foul of rules introduced on 1 July this year, prohibiting employers from offering incentives to their staff or prospective employees to abandon retirement saving. But, with penalties for repeat offenders reaching as high as £10,000 a day and with a robust policing mechanism from
ompany can’t grow money on
The Pensions Regulator very much in evidence, few problems with non-compliance to this rule generally are envisaged in the near future. Paul Sturgess, client strategic director at Capita Hartshead,
says: “The early staging dates are for larger employers, which are least likely to consider abusing the system. There are some practical tools in the pensions regulations designed to reduce the risk of employers manipulating the system, such as the opt-out process requiring the pension scheme rather than the employer to keep the appropriate records. Once we get down to the SMEs, there will be a greater risk and there will always be the odd one that breaks the law, but frankly they are far more likely to suppress salaries.” Tom McGuiness, HR director at Premier Choice Group, a healthcare intermediary with 70 employees, says: “Without a doubt, we will be taking auto-enrolment into consideration when doing salary reviews. It could result in smaller than average pay rises or even pay freezes. The fact of the matter is that even a successful company such as ourselves can’t grow money on trees, and so what we pay out has to come from somewhere.” Research published by the Chartered Institute of Payroll
Professionals (CIPP) this July found 15% of employers as a whole think the impact of automatic enrolment will mean their employees will have to endure pay freezes or even pay cuts in the foreseeable future. But a survey conducted this January by the Institute of Directors (IoD) showed less cause for concern. When asked how they would cope with the increased costs, 80% of employers said from profit, 8% from pay freezes and 4% from redundancies. Malcolm Small, senior adviser on pensions policy at the
IoD, says: “We had expected around 30% to say they would fund the costs from pay freezes, and the result doesn’t reflect the Australian experiences with compulsory pensions, when there were widespread pay freezes around all sizes of business. But attitudes may change nearer the time.” HR
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24 HR Supplement September 2012
hrmagazine.co.uk
1111078-HR-SA2
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