We’re now only 3 months away from the first huge influx of small businesses needing to comply with workplace pensions auto enrolment. So far over 30,000 of the largest employers have completed the process and five million employees have been enrolled into a qualifying pension arrangement over the first three years of a six year roll out.
This year around 45,000 firms will complete the exercise but the pace of auto enrolment is due to accelerate at unprecedented speeds at the start of next year. In 2016 in quarter 1 alone around 100,000 employers will have to comply and a further 350,000 during the remainder of 2016. The pressure will be on to find the most suitable provider, a challenge that so far has thwarted many organisations.
Whilst January 2016 may seem a while away, in many businesses we’ve found that one simple thing regardless of the size and type of the business needing to comply remains true. The earlier a business starts to prepare, the smoother the journey to the staging date and compliance with the automatic enrolment rules.
For larger businesses the journey was typically a 12 to 18 month one. For smaller employers the timescale we recommend that they start to prepare nine months prior to their staging date.
If an employer has less time than this they can still comply but, in our experience, employers who don’t leave themselves enough time to truly understand how the new rules impact their business can find themselves in a situation where they struggle to get everything done by their staging date, or if they do, they find themselves in a position where decisions are hurried and choices are limited.
However, having sufficient time allows employers and their advisers to make thought through, informed decisions without rushing and decide on the best approach to comply with auto enrolment that best suits their circumstances. At this stage research will be key and typically will include which payroll supplier, what other software solutions to use and which pension provider will deliver the best outcome for the scheme members.
Broadly speaking business owners have two options in order to ensure they comply. They can wait until the last minute and take it as it comes or they can request at the earliest opportunity the formation of a project plan from their accountant or a pensions expert. By taking the pro-active route they can rest easy in the knowledge that their solution is ‘on order’ and focus on what they do best, manage their own business.