Auto-enrolment Capacity

Auto-enrolment is upon us and already there appears to be a number of sizeable obstacles in an employer’s path which either have not been fully considered or are not being addressed.

Obstacles

· It is estimated that current mainstream pension product providers can support the setting up of around 2,100 new pension schemes each month.

·  It is believed that, at its peak, capacity for around 70 times this amount might be needed.

·  Many have assumed that product providers will be keen to accept increasing numbers of new schemes; however as with commercial organisations in other sectors, providers will only be keen to take on new schemes which they believe will be profitable. This could adversely impact upon small to medium sized companies who have a low to medium average wage structures or have high staff turn-over.

·  This ‘cherry picking’ is likely to come into full effect in 2014/2015 as the main bulk of UK businesses start to implement their auto enrolment.

·  The result could be that those deemed not profitable may be forced to use NEST, as their pension scheme provider. 

Whilst there is nothing inherently wrong with NEST, unlike other providers, NEST provides no administrative support to employers and so small companies, who are more likely to have limited  internal HR resource, will be very much left to their own devices.  Missing your auto-enrolment staging date could result in a sizeable fine being levied, with few, such as lack of administrative support, excuses being acceptable.

Answers

·  Employers must start planning as soon as possible.

·  The Pensions Regulator suggests this should be at least 6 months, Ward Williams Financial Services suggest 9-12 months to ensure everything is in place well in advance.

·  Early establishment will not cost anything extra and contributions need not be started prior to staging date, however with the potential ‘rush’ to enrolment likely to happen in the later stages of 2014, could your business afford to meet the penalties?

To discuss the implications of auto-enrolment and how Ward Williams Financial Services could help you with meeting your obligations, please call (01932) 830664 to organise a no obligation, initial meeting.