As many advisers will testify, running a business is a serious undertaking, all-consuming in its demands on both time and money. So there will be a degree of empathy for the small and micro firms about to hit their staging dates, where auto-enrolment is one more burden they could do without.
The double digit opt-out rates that have been touted so far belie the scale of the challenge ahead. With Now: Pensions just last week announcing it would be introducing an auto-enrolment employer charge from next year, and with other providers likely to follow, the cost burden firms were already facing is only going to grow.
It is becoming clear that unless something is done, swathes of small firms are going to be left out in the cold. These are the firms that are beyond the realms of supersized HR departments, and often beyond the scope of those who can help with firms’ auto-enrolment responsibilities, the accountants and even the advisers.
And it is not just firms that stand to lose out by not getting on top of their auto-enrolment duties. We also have to consider those who by some quirk of the rules are outside of the auto-enrolment drag net, such as some women and those who are just starting out in the world of work and those closer to leaving it.
So what is the solution? There has been talk of operating a different model for small and micro businesses, where pension contributions would be collected through extra National Insurance payments. On that front though, the consensus seems to be that ship has sailed, and we are too far down the track on auto-enrolment to be devising different approaches depending on a firm’s size.
Another more radical proposal is to remove the complications for employers by simply opting everyone in – no assessing who qualifies, less messing around with payroll, auto-enrolment for all. A utopian ideal, but one unlikely to curry favour with the employers who would have to pay for it.
The Government’s rationale for rolling out auto-enrolment was that people are not saving enough for their retirement. The project will be deemed a failure if all we have to show for it at the end of it is a raft of smaller firms who have been fined, or at worst, gone bust as a result of non-compliance.
The real test for auto-enrolment starts now.
Natalie Holt is editor of Money Marketing – follow her on Twitter here