Legal & General says SME’s staging this year with 3 months to Auto Enrolment implementation have not left it too late. This should come as welcome news for many businesses due to stage for AE this year who may be concerned about non-compliance penalties if they miss their deadline.
Helen Buchanan, Corporate MD, Marketing and Distribution, says, “Many employers we speak to are concerned that they will not have enough time to implement an auto enrolment company pension scheme successfully.
“This belief is fuelled by recent DWP comments that employers need ‘12 months to prepare’ and because many in the pensions industry are saying that new stagers should start to get ready at least 6 months ahead.
“That’s simply not true for the vast majority of cases.
“We estimate that a simple, off-the-shelf scheme can be set up from scratch in around just 3 months - provided that the company’s personnel records and payroll systems are accurate and up to date. If the employer is really committed to getting a scheme in place, it’s quite straightforward to hit a staging date from 3 months out.
“But, anyone who leaves it much later than that could face hefty fines for non-compliance.”
Buchanan added, “Employers staging in May should be already well into their preparations for AE. But those staging in July and beyond should be able to hit their implementation date if they start by the beginning of March.
“In our experience, if we can get into an effective dialogue with the employer 3 months before staging is due, we can help them plan their timeline and get their scheme in place before the Pensions Regulator needs to intervene.”
In 2014 over 31,000 employers with 50 to 250 employees will reach their AE staging date. Around a third of these are located in London and the South East. (Source: BIS, October 2013 – see below).
According to NEST, the vast majority of these may be in danger of missing their auto enrolment staging requirements because they are not yet ready. NEST recently claimed that only 23 per cent of employers staging between February and July 2014 have done everything they need to do in order to be ready to comply (Source: NEST, 28 January 2014).
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