Development manager of Creative Benefit Solutions, on why he welcomes auto-enrolment
As for many people involved with pensions planning, I welcomed the advent of auto-enrolment. Tough challenges need tough measures and rectifying the UK’s retirement saving gap is most certainly a tough challenge.
But while employees will have the option to opt out (but maybe not forever – Norway, Poland and Sweden all offer no employee opt out), no employers will have such an option. Of course not, you may say, otherwise the whole thing would fall flat, like so many other changes in UK pension policy.
Debating whether this is fair or not would now be somewhat redundant as the Making Auto-enrolment Work review for the DWP concluded that all companies, irrespective of size, will have to comply. There are good reasons underpinning this decision but I wonder if the impact on midto small-sized organisations has yet been recognised within this important sector.
Perhaps there has been little outcry from small companies because mandatory implementation for them is still some way off (the staging dates for organisations with payrolls below 50 employees do not begin until 2014 and will not be complete until 2016). Perhaps there are so many other challenges in the current economic environment that attention has simply not been given.
I believe there is a backlash still to come. Most of the independent research carried out so far tends to skew the results towards the views and attitudes of bigger organisations. This is probably just a factor again of timing and importance because the decision-makers in big organisations are, by and large, already well informed and already running some form of workplace pension. They are more ready to offer a view and may very well be more relaxed about the burden of auto-enrolment.
For example, the substantial survey published by The Association of Consulting Actuaries reported that 75 per cent of employers support the principle of auto-enrolment. But only 24 per cent of respondents were from organisations employing less than 1,000, let alone 50, employees. I doubt whether the same picture would come from small companies. Indeed, with workplace pensions often non-existent for smaller organisations, meaning that typically they are the ones who will see the biggest comparative rise in costs, I think many would kick up a fuss.
My main beef is not so much with auto enrolment per se but rather with the lack of communication to this vital sector. What happened to the promised major publicity campaign for Nest? Will the Pensions Regulator have the resources necessary to help small organisations comply? I am sure that many organisations will come to view auto-enrolment as simply another unwelcome tax.