Auto-enrolment – what we’ve learnt so far

There are still a large number of myths out there added to an element of lethargy around Auto-Enrolment, perhaps now is a good time to draw breath and take stock. Brought in 2012, Auto Enrolment is now in full flight with companies of 250 employees or more having all reached their staging dates. This year (April 2014 – April 2015) will see the smaller employers with 250-50 employees staging.

“The numbers….”

Figures from the Pensions Regulator show that some 15,099 employers have reached their staging dates and enrolled some 3.633 million employees in the process which, on the face of it, seems encouraging. However, by May 2014, some 22,940 employers should have reached this point which worryingly suggests that many firms have missed their deadlines.

All in all, some 32,000 firms should stage in the financial year 2014/15. As we then go to the employers with less than 50 employees, there will be 152,900 stagers in 2015/16 followed by 617,000 in 2016/17.

AE

Many firms are under the impression this change is mostly about pensions when in fact the reality is only a fraction of the issue is about pensions as it involves getting your procedures and administration correct to ensure you don’t fall foul of your obligations.

“Myths about Auto-enrolment”

Let’s look at some common myths and try and make sense of these:-

I have plenty of time / I’ll get round to it

Good luck. The Pensions Regulator recommends you start planning 12-18 months in advance to ensure all aspects are correct and in line with regulations. Whilst it can be done quicker, waiting to the last minute and worse could be very costly.

Fines from the regulator for non-compliance are at the rate of £2,500 per day (250-50 employees) and £500 per day (49-5 employees) which makes getting the background processes and information right absolutely critical.

We have a pension scheme already so we are ok

Well, firstly, you need to ensure that this scheme is still fit for purpose and can be used as a qualifying scheme. You need it to be able to enrol new starters or staff turning 22 who earn over £9,440 and above. If not able to do this, you may need to look at a new scheme.

I can postpone and give myself some more breathing space

This doesn’t necessarily make things easier. It doesn’t alter your staging date and staff can still ask to be put into the pension scheme during the postponement period (up to 3 months).

I outsource my payroll so I don’t have to worry about it

The Company is still legally responsible that their process is compliant with the rules. The onus does not shift away from them because they do not physically operate that function.

Employers can have no more than one scheme in place to comply with the rules 

Employers can have multiple schemes in place but must have at least one which meets all of the criteria and is eligible to all job holders.  The question is, how are you going to manage this?

“Capacity Crunch”

An undoubted issue will be the number of advisers available to meet the needs of not only those who are rushing in at the last minute but those companies meeting their staging date. Many IFA’s are simply choosing not to engage in this market for a variety of reasons; from cost to not having clients in this market meaning fewer advisers available to meet the demands of the sizeable numbers above. In short, companies cannot rely on being able to receive quality advice in this area unless they plan ahead.

So that’s what we’ve learnt so far. It means for employers who don’t want to get caught out moving forward knowing there are quality advisers with proven track records in the SME market, that can offer and end to end auto-enrolment solution. If you’d like to consider AGL Corporate Services we are firmly here to support companies and their advisers and would love to help.

For more information on auto-enrolment please visit our dedicated sitehttp://ae.aglcorpserv.com/ or call 0141 314 3765 or 0131 240 3830.