The pensions auto-enrolment staging dates for employers all happen over the next few years. 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. A report published by the Pensions Regulator last September approximated how many employers will be impacted at each staging date and the number involved at certain times is alarming. The concern is that employers requiring assistance will far exceed the availability of the relevant expertise.
Some 6,000 plus of the larger employers, those with between 500 and 49,999 employees will have their staging date in 2013. As we go into 2014 the number of employers with staging dates during the year leaps to a massive 39,000. These will include all employers with between 59 and 499 who will be expected to be running a fully compliant automatic enrolment pension scheme by the end of 2014.
The time scales are scary. 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. Not forgetting to undertake a review to establish just how robust the existing payroll system is.
From 2015 the volumes of employers affected are even greater. At its height it is reported that over 98,000 employers with less than 30 people employed will have a single staging date of 1st April 2017.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 would result in essential staff communications and detailed administrative undertakings. All of 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.
The penalties of missing your allotted 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.
A recent survey conducted by the Department of Work and Pensions concluded that of the 2,400 employers researched 65% will initially seek advice on how to respond to the auto-enrolment legislation from their accountants. The remainder will contact pension consultants, employer bodies and other advisor’s.If employers do nothing before their staging date they could all be looking for assistance to establish a compliant pension scheme all on the same day. The alternative is to accept a government default option such as NEST (National Employment Savings Trust) that may not suit the employer or their staff.
The message to employers is clear. If they want help with auto-enrolment and a pension scheme which benefits including cost, design and effectiveness they need to take action now. The message to their accountants is also clear; they must be pro-active in encouraging such conversations early.