View more on these topics

Auto-enrolment: pay attention or pay the price

By Simon Fletcher

As a chief executive officer of a business in the financial services sector, I have been dealing with the introduction of auto-enrolment for our clients for some time, but I can also speak from an employer’s point of view, having to go through the process ourselves.

Simon Fletcher

To date, we have seen circa 43,000 of the UK’s biggest employers progress through staging and, despite them having both HR and payroll resources, many have struggled, with around 40 per cent already reviewing what they have put in place. Now it’s time for the smaller employer and with companies with as few as five employees reaching their staging date from June 2015, it’s time for you to address this issue.

We witnessed a 600 per cent increase in the regulator’s use of enforcement powers and fines in the last quarter of 2014 and fines start at £400, but then a day rate applies depending on the size of employer so can quickly escalate to a significant sum if issues aren’t addressed.

More than 1.1 million companies will hit their staging dates over the next two years, and this year alone we will see more new pension schemes needing to be set up than the past 65 years combined. If you take one message away from this, then it is don’t delay your preparations.

I will share my top 10 tips to prepare employers for the journey ahead.

1. It does apply to you — auto-enrolment is a statutory requirement that applies to every employer in the UK and that includes you, no matter how small a business you may be. The Pensions Regulator is writing to more than one million employers in February, reminding them that their obligations will soon come into effect.

2. The buck stops here — these are employer responsibilities so you are responsible for their delivery and if it goes wrong you will be responsible for putting it right, including the cost. You can outsource some of the delivery to others but check the terms of engagement; many still take no responsibility for their fulfilment. Think about whether you are offered a contract, its terms and service-level agreements.

3. Check your staging date — you will have been contacted by the regulator informing you when your obligations commence, but you can always check by logging onto its website and putting in your PAYE reference number.

4. Give yourself sufficient time — the most common thing we hear from employers is that it takes far longer than anticipated to get things set up and to manage their duties on an ongoing basis. The rregulator recommends that you give yourself 12 months to prepare, so if you are already within six months of your staging date you have a lot to do.

5. What are your key drivers? Do you have the time and capability to manage this in-house and are you prepared to assume the responsibilities that go with this approach or should you look to outsource its delivery? The cheapest option may end up costing a lot more in the longer term.

6. My provider will deal with it — many employers mistakenly believe that an existing pension provider will deal with auto-enrolment, but the chances are they won’t. Many existing schemes do not qualify with the new rules or the provider simply isn’t interested in offering terms for your auto-enrolment population. Around 40 per cent of the employers who have gone to NEST so far were rejected by their existing pension provider.

7. My adviser will deal with it — setting up a compliant auto-enrolment solution can be quite complex and many advisers don’t offer this service. Don’t assume they will be helping you just because they have provided you with pension advice in the past. Some may provide help in finding a new scheme but that’s only about 10 per cent of what’s needed.

8. My accountant/payroll will deal with it — again, don’t assume that they will, and for those that do you need to understand the parts they do deliver but crucially the parts they don’t. More than one employer has been fined because they didn’t fulfil their statutory obligations assuming the software they had purchased had dealt with auto-enrolment.

9. Make sure the solution you consider works with your business — there are a growing range of auto-enrolment options in the market and they offer different levels of delivery as well as a range of costs. Make sure the one you choose fits with your business structure and understand what aspects of your employer responsibilities it covers and those that remain with you.

10. Who in your business is going to manage auto-enrolment? As well as needing some form of software, someone has to have both the time and knowledge to compliantly run this within your business. You also need to ensure you have cover for this person. Your responsibilities don’t cease because they are on holiday, off sick or leave your employment. You need to consider all the costs that this will incur before deciding upon what is the best route for you to take.

I hope you find my thoughts a useful template to plan your enrolment journey, but if you need any more assistance please use our free contact helpline for you or your head of HR and we will be happy to provide some further guidance.

Simon Fletcher is chief executive officer of Johnson Fleming, a workplace pensions and employee benefits specialist, providing outsourced support to UK businesses as they navigate their way through the benefits landscape.



Ian McKenna: Gadget of the fortnight

With the main mobile operating systems now all having excellent voice recognition capability there really is no need to try to type into tiny keyboards on phones. If you have got a really good microphone and headset, excellent recognition can now be achieved. In my experience, to avoid “sounds like” errors it can be really […]


Ian McKenna: The distributors changing the face of auto-enrolment

When the Department for Work and Pensions moved, in the early days of auto-enrolment, to prohibit employers deducting adviser charges from individual member’s accounts, who would have thought it would cause a fundamental realignment of the value chain in corporate pensions? Yet, based on recent events, that is exactly what is currently happening. Understanding the […]

Ian Taylor

Transact reports £17.8m profit as assets grow 20%

Transact has reported a pre-tax profit of £17.8m for the year to 30 September 2014, as assets under administration grew to £17.1bn. The platform’s profit is up by 5 per cent compared to £16.9m in 2013. Assets under administration increased by 20 per cent from £14.3bn in 2013. Gross inflows averaged £259m per month in […]


Profile: From washing cars to SimplyBiz

You could argue that Matt Timmins and Neil Stevens were business partners even before they were old enough to get a job. The joint managing directors of support service provider SimplyBiz Group have known each other since the age of nine and first worked together as children, washing cars and doing other odd jobs to earn […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm