FEATURE: PENSIONS Auto Enrolment – is it really that difficult?
Auto enrolment was introduced to the UK’s largest employers back in October 2012. Now it’s the turn of the UK’s smaller employers.
What have we learnt so far?
Fewer employees have opted out to date than was expected, at around 9% on average. Our view as to why this has happened is that the larger employers have actively promoted their schemes and the fact that the minimum 1% contribution deduction from pay has gone unnoticed by many.
However, we suspect this will change and opt-out rates will increase as smaller employers reach their staging dates, particularly in 2018 and 2019 when employees’ minimum contributions increase from 1% to 3% and 5% respectively.
Implementing auto enrolment is not as simple as some would lead us to believe. This has been recognised by the Department for Work and Pensions who introduced certain easements to make it simpler.
Tips for employers
1. Make sure you know when your Staging Date is
Many employers are unaware of their Staging Date or have been working towards an incorrect date. This can easily be solved. You need to access the Pensions Regulator’s website and enter your largest PAYE reference number. It will then confirm your Staging Date.
2. Put in place a project plan
Companies may be surprised how much work needs to be carried out. We suggest you start planning at least six months before your Staging Date so as to mitigate unforeseen events.
3. Don’t be afraid to obtain help
Larger employers have significant resources to devote to the project. You will most probably have less and a much lower budget.
There is plenty of information available on the internet, in particular The Pensions Regulator’s website. Pension providers also hold informative seminars, many of which are free to attend.
If you don’t have the time to digest the information, especially if you have not had much exposure to pension provision in the past, there are organisations that can take over the whole project or assist you as and when required.
4. Ensure your payroll provider is auto enrolment compliant
Your payroll provider is a very important cog in the auto enrolment wheel. A compliant payroll system allows automation of the process, freeing up HR, finance and payroll staff.
5. Choose a suitable pension arrangement
You may already have a suitable pension arrangement in place. Therefore, it makes sense to use this arrangement as your auto enrolment vehicle. However, this is not always possible as smaller sized employers are less appealing to many insurance companies. In these circumstances we suspect that the main multi-employer schemes such as NOW, NEST and The People’s Pension will become even greater players in this market.
When it comes to choosing a suitable provider there are many things to consider including communications, charges, investment options, retirement options and ongoing support. As this is a big decision to take you should seek external advice.
6. Engage with your employees
There is no doubt that this is going to be an additional cost but if you fully engage with employees then you should experience a positive reaction.
It is also important to educate your employees about the importance of saving for retirement and get them to understand that, after tax relief, the real cost to them is far less than they may realise.
So, it’s not that difficult, is it? In a nutshell:
• Make sure you know when to comply. • Plan ahead. • Engage with your employees.
Quantum Advisory – who are we?
Quantum is an independent financial services consultancy that provides pension and employee benefit services to employers, scheme trustees and members. With offices in Birmingham, Cardiff, London and Amersham, we design, maintain and review all types of employee benefit arrangements so that they work efficiently and deliver real value.
Stuart Price FIA
Stuart is a Partner at Quantum where he provides auto enrolment advice. He fears that many smaller employers are not geared up for auto enrolment. He has successfully taken a number through that process. Apart from being a qualified actuary, he also holds the PMI’s Certificate in Pensions Automatic Enrolment.
T: 0121 632 2192 E:
stuart.price@
quantumadvisory.co.uk W:
www.quantumadvisory.co.uk One Victoria Square / Birmingham / B1 1BD
MARCH 2016 CHAMBERLINK 39
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60