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Providers turn away auto-enrolment business as capacity crunch bites


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.”


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. That’s ok just go to NEST or The Peoples Pension or NOW. We are finding that even on old commission scheme providers are also pulling their terms

  2. Dominic Thomas 4th July 2013 at 10:05 am

    Fiasco waiting to happen. Regulators and Politicians you have been WARNED. Rethink the implementation schedule URGENTLY.

  3. I wonder how many auto enrolment based members or schemes have been rejected this year by the customers initial preferred provider… a list would be very interesting, including the new providers too?

  4. Just to put a different spin on this, and I may be accused of being purposefully naïve here, but AE is a payroll burden – all a provider needs to do is plug the reports into their platform when produced…..unless of course they are turning people away who want to use their full AE proposition as opposed to just the platform. Could AE be used as a defence against unprofitable business?

    Time to lick those lips NEST/NOW

  5. We have had a charity specialist pension provider decline a client as they could only start with the 1% contribution.

    Staging date Feb next year payroll provider and Nest should be fine…shouldn’t it??

    Oh boy this is only going to get more of a dog fight!!

  6. Don’t forget the big picture.

    Millions of people are about to benefit from being in a company-sponsored pension scheme for the first time in their lives.

    Whilst there will no doubt be admin and teething troubles, the improved financial security of many, many people, mostly lower paid, is a prize well worth having for this country.

  7. This whole affair is turning into a train crash…

    Providers that pushed for the RDR are wanting 1% plus for schemes that a couple of years ago would have attracted .75% including some form of remuneration..

    Others are now wanting to charge four figures to get an existing scheme into AE.. Thats TCF and certainly not very Friendly…?

    Many employers do not want to even talk about AE until they have to do something as evidently in the real world things are pretty tight out there.

    But hey we have been told that no one needs advice and that by funding 2% of band earnings will produce riches untold…. well a worthwhile pension…

  8. 8th July 2013 at 8:33 pm

    Asking for 6 months sounds like common sense…
    We have had too many corporates coming to us with less than a month to go, and assuming it is “simples”
    If you’re going to do the admin yourselves, with the inherent risks associated no problem, NOW: if you want a supportive admin solution, with integrated payroll and pension middleware to take admin burden away, give us enough notice ;))

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