In order to increase private pension provision for low/medium earners the Pensions Act 2008 introduced workplace pension reforms, which took effect from October 2012. These reforms mean that eventually all employers will have to offer a qualifying workplace pension scheme to their workers and automatically enrol them into it.
This is good news for employees but employers need to understand the associated costs and how best to ensure maximum quality and efficiency. The best schemes should continue to have a positive impact on staff retention and recruitment.
Pensions Auto Enrolment staging dates for employers all happen over the next few years with the largest employers first. Staging dates are the deadlines for employers to have installed a qualifying workplace pension scheme or have made the necessary adjustments to ensure schemes already in place comply.
The timescales are non-negotiable. The penalties of missing your allotted staging date include some serious fines from the Regulator – these will vary according to the size of the workforce, for example, an employer with between 5 and 49 workers will be fined £500 per day until they comply.
To complete the key processes that will ensure the right workplace pension scheme is in place, including workforce assessment, cost analysis, existing scheme suitability and then implementation it is estimated a lead time of 18 to 24 months is required.
Those employers with existing pension schemes would be wrong in thinking it will be a hop, skip and a jump to meet the legislations’ required Qualifying Workplace Pension Scheme (QWPP) standards. Indeed the existing arrangement may by necessity require substantial re-design. This should however be regarded as an opportunity to overhaul an arrangement that is no longer fit for purpose and could even result in cost savings for the employer at no detriment to the scheme members.
Robust planning is essential and employers should begin consultations with advisers early, design and implementation will be key – the first step for employers who have yet to take action is to establish their assigned staging date and begin the process.