A recent survey by the Federation of Small Business (FSB) concerning pension auto-enrolment found that 75% of business owners, who responded to the survey, stated that pension auto-enrolment was putting too much pressure on them.
Further, 45% of respondents in the same survey were unclear about their responsibilities in regard to pension auto-enrolment. The survey also found that 25% of respondents were not aware of their pension staging date.
In response to the survey’s findings Lesley Titcomb, Chief Executive of the Pensions Regulator, stated ‘ We’re not complacent. In the next three months, 100,000 employers have got to enrol their employees. The message to them is that they need to start early and make a plan.’
At HR First we support businesses in connection with employment matters and as such we have supported a number of businesses transiting to auto-enrolment compliance. From the perspective of an advisor supporting a business through the process, we seek to make the process of transition for the client as seamless as possible and for a business going through the transition we would concur with Lesley Titcomb’s advice, with the added caveat that, depending on the business’s starting position leaving it to the last three months is likely to put more pressure on the business which can be avoided with more advanced planning.
In our experience employers normally split into two categories in regard to their pension arrangements. The first category is those employers who have an existing pension arrangement to which the employer makes a pension contribution. For this category of employer, normally a high proportion of staff are enrolled in the pension scheme. In this situation, often the existing pension scheme can be converted to an auto-enrolment pension compliant scheme. However a word of warning, some pension providers are making significant charges to employers for running such pension schemes. Therefore remaining with an existing provider may not be the most cost effective solution for the business in the longer term. Employers should also consider that offering a pension is now a statutory responsibility and as such there are obligations on employers. Under the auto-enrolment regulations, the Pension Regulator can request that employers provide records to demonstrate their rationale in relation to pension provision. Remaining with a poorly performing pension scheme simply because it was administratively conducive is unlikely to demonstrate sufficiently probity to the Regulator or to staff who are members of that scheme. As a result contributions made to such a pension scheme may have little or no positive impact as a staff retention measure.
The second category of employer is one who facilitated access to a stakeholder pension scheme. In the pre-pension auto-enrolment landscape, an employer was only required to provide a stakeholder pension scheme, to facilitate membership of that scheme to employees who voluntarily enrolled, to make appropriate deductions from pay on behalf of pension scheme members and to pay pension contributions directly to the pension scheme. In reality enrolment levels in such schemes was extremely low, and in many cases non-existent. As a result many employers have no knowledge or experience of working with a pension provider. Consequently many employers prior to their staging date need to source a pension provider, select a suitable and compliant auto-enrolment pension scheme, default pension investment fund and determine their preferred compliance mechanism as well as understand the cost implications for their business of auto-enrolment compliance and communicate with staff the pension arrangements they have implemented and all this to the prescribed deadlines.
In order to support clients with auto-enrolment pension compliance HR First has developed a comprehensive auto-enrolment pension support service. Using data about the client’s workforce, as well as operational preferences our HR team and pension partner analyse the profile of the workforce. This data is then used to guide decision making and make recommendations to select the most suitable pension provider, pension scheme and pension compliance mechanism. Using this method HR First is also able to analyse and project the cost implications using each of the permitted compliance criteria. In this way HR First is able to support clients to understand and manage and anticipate the costs auto-enrolment pension compliance for their business.
Once the final decision is made by the client, our HR Team prepare employee documentation in accordance with the regulations for distribution by Company representatives within the prescribed relevant time frames. Managers and staff are given comprehensive support throughout the process. Following the staging date our team register the scheme with the Pension Regulator.
Our pension partners are regulated by the Financial Conduct Authority (FCA). This means that we are able to offer clients access to a wider range of pension products. Our pension partners are not tied to any pension provider or product so any advice or product recommendations are based on an impartial evaluation of the provider and product offering and the needs of the client.
If you would like help with pension auto-enrolment please call HR First on 01962 676167 or register your details hereLast updated: February 19, 2016 at 10:56 am