Auto-enrolment – don’t leave it too late to get ready, warns Pensions Regulator

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As the next wave of employers faces auto-enrolment, the Pensions Regulator believes many could face a steep learning curve to be ready on schedule.

The largest employers have already been through automatic enrolment. The first wave of medium sized employers is due to hit their staging date in April 2014.

Research released recently by the Pensions Regulator shows that:

  • Awareness of the fact that workplace pensions law is changing is high amongst employers of all sizes,
  • But awareness of the details of the reforms remains low,
  • 52 % of medium employers (those with 50-249 employees) believe that getting ready for auto-enrolment takes four months or longer,
  • 84% of medium employers have started their preparations,
  • 41% of small employers (those with 5-49 employees, who are not due to stage until after June 2015) said they would ‘leave it as late as possible before thinking about how to comply with the introduction of automatic enrolment’.

The Pensions Regulator is warning against complacency. The Pensions Regulator’s executive director of automatic enrolment Charles Counsell said:

"The response of the largest employers to automatic enrolment has been positive and at the start of August more than 1,600 employers had returned their compliance declaration to us by registering their information.

But the vast majority of employers are yet to go through automatic enrolment, with tens of thousands of medium sized companies due to stage in 2014. Our call to action to employers to know your staging date and make a plan are more relevant than ever."

EEF agrees that employers should be getting ready as far in advance of their staging date as possible. In our experience, planning for auto-enrolment often involves grappling with complex issues such as:

  • whether to use the same or different schemes for workers not currently in a scheme,
  • how to handle workers who have the right to join your existing scheme but haven’t done so,
  • whether to introduce salary sacrifice,
  • whether to use contractual enrolment,
  • whether you need to change employment contracts, and
  • how to comply with complex and overlapping consultation requirements.

If you are a medium-sized employer and you have not started to make a plan yet, then we recommend that, as a minimum you do the following:

  • Contact your payroll providers to make sure that they have compatible payroll software in place which can cope with the complexities of auto-enrolment – e.g. which can assess the eligibility criteria and types of earnings,
  • Contact your pension providers to assess whether they have capacity to continue with your scheme and whether you can modify your existing scheme to ensure that it is a qualifying scheme.

For more details, see the Pension Regulator’s website and EEF’s 14 point plan for getting ready for auto-enrolment.

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Media Team 020 7654 1576

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