Written by Malcolm Small on Wednesday 3 December 2014
As we move towards the end of 2014, it’s a good time to review where the automatic enrolment of employees into pension saving has got us. Certainly, this policy appears to have arrested a decades – long decline in pension scheme membership, according to the latest figures from the Pensions Trends survey from the Office for National Statistics. This shows a sharp up-tick in membership in 2013, which will have continued this year.
The Pensions Regulator estimates that more than 27,000 employers have complied with their new duties up to October 2014, with over 4.4 million employees enrolled into pension saving. Many expected that this year would see a “capacity crunch” as the pension providers struggled to cope with the volume of employees being enrolled. This did not happen, and many are breathing a sigh of relief. Providers coped. Employers also coped, with some late registrations and a handful of enforcement notices at the edges.
More employees are putting money aside for later life, although there is widespread recognition that current, and proposed, contribution levels are too low to be meaningful. But so far, it seems, so good. However, there are still no less than 1.2 million small and micro employers due to “stage” between now and 2018. They will not have the resources in H.R. and finance that the larger employers who have already staged possessed. Many will struggle to comply in the face of an arcanely complex auto-enrolment rule set.
The real “capacity crunch” may well be in late 2015 and 2016, as hundreds of thousands of small employers attempt to comply with their duties in time. The experience so far is that auto-enrolment is complex for employers to understand, and that it requires more time and effort than most employers recognise.
So the message has to be, to all employers, no matter how small – find out your “staging” date and start preparing now. The fines for non-compliance are serious for those who fail to comply on time. Act now.”