With only nine months to go before auto-enrolment is put into operation for the largest businesses, many  employers still haven’t finalised plans to adopt this Government initiative. The legislation will ultimately affect all employers, from the largest FTSE 100 companies to smaller businesses with just a handful of employees. Businesses must actively engage with the process and assess the critical factors of the implementation, expenditure, employee education and scheme options.
Recent research from Clear Path Analysis shows more needs to be done to educate UK businesses, with 70% of employers yet to finalise preparations for auto-enrolment. Three fifths of pension scheme respondents stated a lack of understanding of the true costs in auto-enrolling staff members is causing them to hesitate with plans for appropriate schemes. As the urgency for businesses to prepare becomes more imperative, the DWP has launched an advertising campaign aimed at educating individuals and employers about auto-enrolment. However more could be done to help businesses, particularly SMEs to learn from the experiences of larger companies, many who are well on track to meeting their deadline.
A new report sponsored by HSBC with contributions from British Airways, Kingfisher and the Federation of Small Businesses, discusses the key issues faced and the best ways to overcome the challenges of responsibility, flexibility and the associated costs. ‘Auto-Enrolment for Pension Schemes’ seeks to assess these crucial issues facing companies over the next few years.
Martin Bowmer, UK Head of Sales, Commercial Wealth Management at HSBC, explains why businesses need to consider the problem sooner rather than later: “All employers within the next few years must have a pension scheme in place, auto-enrol all eligible jobholders into this and contribute into it on their behalf.”
“Regardless of the size of business, it will mean additional administration and potentially significant cost implications. For many employers, particularly SMEs, auto-enrolment will be seen as simply more bureaucratic red tape, but by planning ahead the burden may not feel as great when the date to comply with the new legislation arrives.”
Rob Pearce, Head of Workplace Retirement Services, HSBC, continues: “Businesses are clearly placing auto-enrolment to the bottom of their to-do list and may not worry about it until it is too late. Putting arrangements in place will take time and learning from the experience of other larger companies can help.”
Bowmer highlights the new employer responsibilities under the law: “As an employer you will have a number of ongoing administrative tasks, including identifying, enrolling and providing information to new employees, as well as organising refunds to those who opt-out and re-enrolling those who do.”
Despite the complex process, advice is readily available: “The good news is that there is lots of help and guidance with auto-enrolment. The Pensions Regulator has specific guidance for employers including information on staging dates and details on what future responsibilities will be. However, they can’t provide advice specific to your business.
“Employers will need to contact their advisers and accountants who should be able to help with sorting out the additional cost auto-enrolment will have on their wages bill and advice on adapting existing pension arrangements or setting-up a new scheme .”
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