Scottish Life is turning away automatic enrolment business from firms that are less than six months from their staging date due to concerns they will be unable to deal with the administrative workload.
Experts have previously warned of an auto-enrolment “capacity crunch”, with insurers struggling to meet the demands of employers as the reforms are rolled out to small and medium sized businesses.
A Scottish Life spokesman says the provider usually requires a lead-in time of at least six months to prepare employers’ payroll systems and roll out communications to staff ahead of their auto-enrolment staging date.
He says it will only accept auto-enrolment business from new or existing customers that have less than six months until their staging date if the employer agrees to meet strict criteria.
The spokesman says: “Our ideal requirement is to have at least six months from the date of request to the staging date. This is based on real experience of our interactions with employers and advisers to date.
“It applies to companies with existing pension arrangements with Scottish Life or any other provider and with potential new arrangements.
“We will consider a shorter lead time than six months only if we have agreement that the Scottish Life ‘run system’ will be used, that standard member communications will be used, and on the contribution design for the whole work force.
“This approach is required so that we can understand if the time available until the staging date is adequate to implement the scheme to our usual quality. We will not provide terms on these schemes until this has been established.”
Legal & General will not confirm whether it has a specific cut-off period, although it is understood the provider will not deal with employers that are within three months of their staging date.
An L&G spokesman says: “An employer should ideally be thinking about auto-enrolment at a minimum of six months ahead of their staging dates, preferably longer.
“We are helping all of our customer to meet their auto-enrolment obligations and have encouraged them to engage early in the process.
“To date we have not turned an employer away but we are unable to provide a solution to an employer that has not embarked on their planning for auto-enrolment in good time.”
Other providers recognise the challenge posed by employers that do not begin preparations for auto-enrolment early but did not provide details of when they will consider turning business away.
An Aviva spokesman says: “Our first priority is to support our existing customers through auto-enrolment, and that is where we are applying our efforts.
“However, with any potential new business we will look at each customer’s individual needs and assess whether we are able to assist them, and we may make other recommendations, for example, refer them to Nest if that is more appropriate.
“We do not make a judgment on whether to proceed with a customer on the basis purely of how much time they have before they stage. There are several stages within the auto-enrolment process, and it is important to understand exactly where the customer is in the process and what arrangements, if any, they currently have in place.”
Scottish Widows head of corporate pensions Pete Glancy says: “Given how much time and effort is required to deliver auto-enrolment schemes, we are not surprised some providers would express concerns about being able to deliver with less than six months notice.
“We currently have no plans to introduce a policy of this nature and as we move through the auto-enrolment cycle we anticipate the needs of employers will reduce in complexity and the set-up process will become increasingly standardised and streamlined.”
A Prudential spokesman says: “Our approach has been to open a dialogue with clients 12 to 15 months ahead of staging dates and in this way we have been successful in agreeing auto-enrolment solutions well in advance of deadlines.
“We have not imposed set cut-off periods and do not intend to. Instead we treat each client’s situation separately and work with them and their advisers to ensure we reach all the required milestones well in advance of staging dates.”