The drive to implement pension auto enrolment by the government has\u00a0been\u00a0in place for a little while.\u00a0\u00a0The inititative was\u00a0lead because private pension saving declined in the UK, probably impacted by the global recession leading to a\u00a0drop in people\u00a0saving for their old age as well as undersaving.<\/p>\n
The Pensions Regulator has issued 32,000 letters to organisations with staging dates from January 2013 to September 2014.\u00a0 From January 2014\u00a0small to medium organisations (SMEs) will be\u00a0affected and will need to commence pension auto enrolment in accordance with their staging date.<\/p>\n
The Pensions Regulator has recently completed an analysis on progress with UK employers and provided a commentary on how they are coping with the process so far.<\/p>\n
Most employers are now aware of their obligations in respect of pension auto enrolment in that they have to automatically enrol UK workers,\u00a0provide a qualifying pension scheme and make contributions however\u00a0detailed knowledge of\u00a0the finer points of implementation are lacking.\u00a0\u00a0\u00a0The awareness of employers with their obligations has grown more and more perhaps due to the TV adverts promoted by the government where celebrities such as Nick Hewer, Karen Brady and Theo Paphitis are seen saying\u00a0“I’m in”.\u00a0 Awareness has grown more with micro and small businesses but\u00a0percentage wise is very low compared to awareness in large organisations who seem to be very\u00a0aware of their staging date. \u00a0Larger organisations are also more likely to have a more detailed knowledge of changes in pension law compared to smaller organisations.<\/p>\n
Awareness of pension law changes has increased with intermediaries such as accountants and book keepers particularly if they advise small businesses.\u00a0 Awareness with pensions consultants, pensions administrators and IFAs who advise large organisations close to their staging date is very high.<\/p>\n
Over 3\/4 of larger employers think that pension auto enrolment is a good idea in principle.\u00a0 Whilst many large organisations feel they will be able to cope with the administrative burden of pension auto enrolment only 48% of micro businesses have indicated confidence in being able to do so.<\/p>\n
Most large organisations said they would not leave things to the last minute to implement pension auto enrolment compared to 40% of small and 66% of micro businesses who said they would.<\/p>\n
50% of large organisations and 65% of medium organisations felt it would be easy to cope with the changes compared to\u00a057% of small and\u00a042% of micro businesses.\u00a0 Large employers have tended to be the most prepared for the changes, with most having started some form of preparation, and with more now in the implementation stage than in spring 2012. Most large employers were also confident that their organisation would have done everything it needed to by the deadline.\u00a0Only 18% of micro employers have begun preparation and lack confidence that everything will be done by their deadline.<\/p>\n
The main concern about pension auto enrolment for SMEs is the cost of implementation. Micro employers are also more concerned about the administration and communication to workers.<\/p>\n
Many large organisations have already consulted with an external advisor to seek advice whereas many SMES plan to gain external support\u00a0in future.\u00a0 Many pension consultants are already getting actively involved in providing technical advice to their clients, but it is advice rather than hands on support with the expectation that their clients will undertake many of the admin activities themselves.\u00a0 Many book keepers and accountants are undecided on the type of support they will provide to their clients.\u00a0 Potentially many small and micro businesses may be lacking in the support available to them.<\/p>\n
Many employers felt the penalty for non-compliance would be a fixed penalty or fine.\u00a0 The Pensions Regulator has already opened 89 investigations into non-compliance with large organisations who have passed their\u00a0staging date and took no action.\u00a0\u00a0The investigations have focused on employer readiness and helping employers become compliant.\u00a0 No one has yet been fined for not complying however, this may change in 2014 when the huge number of SMEs will be affected by the change in pension law.<\/p>\n
To conclude it would seem that although larger organisations seem to have everything in hand, potentially SMEs may struggle to cope with the necessary burden and should seek help\u00a0well in advance of their staging date\u00a0if they are unsure of what to do so they\u00a0avoid any investigation by the Pension Regulator for non-compliance.<\/p>\n