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Providers turn away auto-enrolment business as ‘capacity crunch’ bites

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Providers are warning of auto enrolment capacity issues with Scottish Life refusing business from firms less than six months from their staging date.

Experts have previously warned insurers will struggle to meet the auto-enrolment demands of employers as the staging dates for small and medium-sized businesses approaches.

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.

It will only accept auto-enrolment business from new or existing customers who have less than six months until their staging date if the employer agrees to strict criteria.

The spokesman says: “We would need agreement that our ‘run system’ will be used, that standard member communications will be used, and on the contribution design for the whole workforce.

“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 would not confirm whether it has a specific cut-off period, although it is understood the provider will not deal with employers who are within three months of their staging date.

A number of other providers contacted by Money Marketing say they recognise the concerns over auto enrolment capacity but will not provide details of business they are turning away.

Corporate Benefits Consulting director Allan Maxwell says: “It was inevitable that providers would start turning away business which is either too difficult to administer or not profitable enough.”

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