This year some 38,000 businesses are scheduled to automatically enrol their staff into a qualifying workplace pension scheme (QWPS) with 32,000 employing between 50 and 250 employees set to go from the beginning of the new fiscal year in April 2014.
Much has been said in connection with the low opt out rates experienced by larger employers to date – workers are permitted to back out of the scheme if they wish within the first month – but is this really such a surprise?
Only just a few years ago research showed that for the majority of employees saving for retirement was less of a priority than holidays, home improvements, going out, saving for a rainy day, the car, shoes and clothes. A recent survey undertaken on behalf of NEST (National Employers Savings Trust) suggests that auto enrolment activity has pushed pensions right up the list of consumers’ priorities. Is this because during recessionary times people feel more vulnerable for their future? Or is it just that we all understand that life is short and we need a plan.
Whatever the reason it is clear that the idea of saving for a future income including a pension now resonates with the UK public more than ever. The recent Budget announced massive reforms around pension accessibility which will only accelerate this shift of opinion.
The responsibility of setting in place qualifying workplace pension schemes has been landed on employers and some cracks are beginning to appear. The Pensions Regulator (TPR) investigated more than 500 suspected breaches of auto-enrolment (AE) legislation in just 6 months and 590 in total since October 2012.
As a result the regulator took action under its compliance and enforcement policy in 134 instances to 29 January 2014. The most serious of the compliance notices issued related to companies who had failed to establish a scheme and complete registration.
In addition, TPR delivered 28 instructions to companies at risk of non-compliance prior to January 2014 and 101 warning letters were issued for minor alleged record keeping or staff communication breaches.
The latest figures come as a concern rises over employers failing to meet their AE duties due to the anticipated industry capacity crunch in the coming months.