Since pension auto enrolment was first implemented in the UK in October 2012 as a government initiative to ensure workers have sufficient pension savings for their retirement,the process has been gradually rolled out and s now affecting millions of small businesses. So having been in place for quite a few years now the government is seeking to make changes to pension auto enrolment.
Whilst large and medium sized companies in the UK have been required to comply with due process otherwise are facing huge fines, the government has become increasingly concerned about the impact of pension auto enrolment on small businesses with their lack of the resources afforded to bigger companies.
The government has now pushed back the dates for increasing contributions to April 2018 and 2019 in an effort to stave off a potentially looming crisis of small businesses and pension providers being able to cope. There has been media coverage about concerns of NEST, the only workplace pension without fees being able to manage as probably the main pension provider small businesses will look to due to its affordability. In the next few years millions of small businesses need to comply.
The qualifying earnings band for auto enrolment minimum contributions will remain at £10,000 in any pay period from April 2016. The qualifying earnings band for 2016-17 will be £5,824 and £43,000 per annum.
The DWP is aiming to simply auto enrolment with some minor changes from April 2016. There will be no need to auto enrol/re enrol company directors and members of limited liability partnerships, a simplified method for an employer bringing forward its staging date and a simplified time scale for employers to notify the pension regulator that they maintain an auto enrolment pension scheme. Consultation on these changes closes in February 2016.
One thing is for sure, as with all government legislation, these will not be the last changes to be announced by the government about pension auto enrolment.
After the dearth of the recession years, employee reward is on the up and compensation and benefit issues are in the spotlight.
For many years salaries have stagnated with few companies being able to offer a pay increase and many making many job cuts. But along with the current buzz of increasing recruitment, pay seems to be top of the agenda with pay awards of around 2.5% being anticipated this year and reward structures being assessed for fit for purpose reasons.
As I blogged about recently there is a skills shortage in the UK so it is important the companies hold onto their talent and make sure they are incentivised. Pay can be a big incentiviser for some, but employee total reward encompasses financial reward with motivational aspects such as career development, job satisfaction and recognition. To retain and recruit talent companies may have to consider paying above the market rate.
Employee reward specialists have always been thin on the ground, but now, more than ever, they are needed to help organisations develop reward solutions to support business strategy. Employee reward professionals can help with employee reward strategy, analytics to assist with pay and benefit reviews, job evaluation which links job size to pay and defends equal pay claims, flexible benefits, salary sacrifice schemes, bonuses, commission schemes and pensions particularly pension auto enrolment.
Total reward statements can help employees to see the full effect of the benefits they receive. So many employees do not understand the benefits a company provides to them. All benefits can be included such as maternity pay, health insurance, employee assistance programmes. Seeing financial employee reward on paper as a simple pie chart or graph can add to employee retention.
It makes sense for employers to reward their staff well to encourage motivation that will impact on the bottom line.