Posts Tagged ‘Auto-enrolment’
Employers struggle to achieve 2014 auto-enrolment
Less than 1 in 4 employers staging for auto-enrolment in the first half of 2014 have confirmed their provider and completed everything necessary to be ready to comply. This is according to a report issued by NEST the pension scheme of last resort for auto enrolment.
An article in Pension Expert magazine helps to underline the logistics of what UK employers are facing. This year over 25,000 employers are expected to reach their staging date. If you click here you can read the article. That’s the date upon which you have to comply with the new rules.
Although you can postpone your staging date for up to three months it still means that you have to have everything in place ready to go by the earlier staging date.
As if this wasn’t bad enough news the pensions industry is already hinting that from advisers through to providers it will be very challenging to support all these employers.
This is something that we can echo in our own business. We are currently running six projects for clients who stage this year and are about to take on another two. If there’s any advice that we can give employers it is – don’t sit on the letter from The Pension Regulator telling you when you need to comply. This isn’t something that you can easily do yourself in a month or so. We had a call last week from an employer who has to comply from 1 February who hadn’t done anything about auto-enrolment. Reluctantly we had to turn the employer away as there was no way we could get everything in place in such a short time without jeopardising the service our existing clients receive.
Our experience, which is backed by the views of The Pensions Regulator, is that ideally you would have between a year and eighteen months to complete the project. The last thing you want to be doing is having to make decisions under ti
me pressure.
The Pensions Regulator knows – from your PAYE records with the tax man – when you have to comply. They will write to you about a year to eighteen months before your date. They know that within four months of that date you must go on-line on their website and complete the registration of your auto-enrolment scheme. They will start to write to you about that nearer the time. If you do nothing or are late The Pensions Regulator will know. They have the power to fine you. If you click here you can read more about how The Pensions Regulator will deal with non-compliance.
All is not lost though
As long as you have a reasonable time left we can still help. We offer a fully managed project that will make sure that you are fully compliant that deals with provider selection, assessment processes and software, communications, registration and governance.
Alternatively, we are working with some smaller employers on a more light touch basis where we effectively coach them on delivering their own project. At a time when money is tight form many employers this can be a good way of getting some advice to help you comply.
If you want to kick start your auto-enrolment project and get moving call us on 01163 800 133.
Steve Clark
Changes to auto-enrolment rules?
The Government is consulting on changes to the auto-enrolment regulations.
Fear not, there are no big changes. The Government is just responding to
issues identified in feedback received since some of the largest employers began enrolling employees last year.
The changes include
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Making it easier for employers to use existing payroll processes to determine whether workers need to be auto-enrolled and for assessing whether existing schemes are qualifying schemes.
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Turning off the employer duty to auto-enrol where a worker has recently opted out of pension saving before they were automatically enrolled (e.g. where an employer makes joining the pension scheme a condition of the contract of employment).
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Confirming that opt-out notices need not be identical to the form specified in regulations.
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Extending the joining window deadline from one month to six weeks.
The Government is looking to make these changes in April 2014. As always…….watch this space.
Steve Clark
Automatic Enrolment Earnings Triggers
In case you didn’t see it amongst all the furore about Boris Johnson’s interview with my old school mate Eddie Mair; the Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band)Order 2013 – SI 2013/667, was recently laid before Parliament. This comes into force on 6 April 2013.
The earnings thresholds for 2013/14 are as follows:
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Automatic enrolment eligibility earnings trigger £9,440
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Lower qualifying earnings band limit £5,668
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Upper qualifying earnings band limit £41,450
We’ll be discussing these with 44 Financial clients (if they impact on you at our next pension reform meeting. If you are not already one of our clients and all this is news to you – give us a call on 0116 260 5443 to book an initial consultation at our cost.
If, on the other hand, you want to see Boris Johnson squirm see the BBC interview here.
Steve Clark
Royal Mail happy with 16% opt-out
Royal Mail has confirmed only a 16 per cent of it’s 15,000 weekly paid employees chose to opt-out of workplace pension provision. This is lower than Royal Mail thought they’d get but higher than some companies who have already gone through the process.
Only recently we commented on Asda’s announcement that they had achieved an 8% opt-out rate. You can read more here. The opt-out rates in these larger employers is much lower than many industry commentators had anticipated. Some commentators had anticipated 20%-30% opt-outs.
Some interesting feedback from Asda was that the average age of those opting out was 47. It looks like there may be a core of people who are die hard non-savers who will still opt-out. Getting these individuals to save may prove to be a challenge only achievable by the removal of the opt-out.
Our view is that as the staging dates apply to employers with less employees we’ll see the opt-out rate increase. Smaller employers are unlikely to be able to afford the kind of communications exercise that the Royal Mail and Asda undertook.
It’s all fascinating in a kind of nerdy way! Watch this space.
Early feedback from NEST CEO on new pension rules
Speaking at the Institute of Directors Conference recently , Tim Jones, CEO of NEST said:
‘From our experience with employers, it is clear that they need to give themselves as much time as possible to get ready. We recommend up to 18 months and advise they pull together a team from across the organisation who can help meet their duties.’
NEST is working with over 300 employers, with 100 of these being large employers in the first stages of implementing automatic enrolment. These include household names such as BBC, BT, McDonalds, NPower, Iceland and Travelodge, and employers from a wide range of sectors, such as Barchester Healthcare, Compass Group and Mitchells and Butlers.
Tim also announced four more names of employers to have chosen NEST for their automatic enrolment duties, namely: Balfour Beatty, Four Seasons Health Care, Spirit Pub Company and The Open University.
Reflecting further on lessons learnt so far, Tim drew attention to the need for employers to make sure they work with their payroll providers and in-house teams to get the ‘right data in the right format’.
Comment from 44 Financial:
It’s clear that to successfully deliver a compliant auto-enrolment project medium size employers will need between 12 and 18 months. If you have a staging date in 2014 you need to have started the project by now.