It is one year since employers started auto-enrolling staff into pension schemes and today companies with between 800 and 1,249 employees will enroll anyone who do not already have a pension into a workplace scheme.
In the same week, a survey by the National Employment Savings Trust (Nest) found that fewer people than expected are opting out of these new workplace pensions. According to the Nest research, only 9 per cent of employees chose to leave pension schemes after being automatically enrolled. This is much lower than the government’s prediction that as many as a third would opt out.
To mark the anniversary of the scheme Nest has launched its five dos and don’t for employers preparing to auto-enroll staff:
1. Plan early – don’t underestimate how long it will take, talk to your payroll and other providers as soon as possible.
2. Assess your workforce to understand which of your workers are affected.
3. Communicate with staff clearly and early; engage and involve. Have a communication plan and involve all relevant departments in your business.
4. Examine systems (particularly payroll) to ensure they are ready and capable.
5. You may want help - you may want guidance from experts/external advisors.
Employer don’ts (employers who have been through the process warn ‘don’t make these assumptions’)
1. ‘Once we’ve chosen the pension provider everything will be done for us’
2. ‘There’ll be a lot of work leading up to the deadline but then our work is done’
3. ‘We have to offer a pension to all staff’
4. ‘It’s like the stakeholder pensions. Most people will opt out’
5. ‘Our payroll provider will tell us what we need to do with regards payroll’
Tim Jones, chief executive of Nest, said: “Auto-enrolment has brought a radical change to workplace pensions, but it will rapidly become the new normal. While the early stages have primarily affected large employers, the numbers of employers coming under the duties increase dramatically in the next few months. We all have to up the pace to be prepared for much higher volumes and to meet the challenges implementing automatic enrolment brings.
“Nest is already working with more than 1,000 employers for automatic enrolment. Our insights into their experiences have enabled us to develop some really useful dos and don’ts for employers still to go through the automatic-enrolment experience.”
For information visit http://www.nestpensions.org.uk/schemeweb/NestWeb/public/NESTforEmployers/contents/nest-for-employers.html
CIPD Article 1 October 2013