Out-Law News | 24 Jan 2014 | 5:00 pm | 2 min. read
Setting out its updated forecast of the number of employers that will become subject to auto-enrolment duties over the next four years (4-page / 66KB PDF), the regulator said that the figures showed the "challenge ahead" for the industry. Firms employing between 50 and 250 people will begin auto-enrolment by the end of this year, joining the 5,431 employers already contributing to pension schemes as of the start of this year.
Pensions expert Simon Tyler of Pinsent Masons, the law firm behind Out-Law.com, said that there were potential "pitfalls" ahead for both employers and pension providers. Many of those larger employers that had already gone through the process would have received tailored advice from benefit consultants and providers before doing so, he said.
"Auto-enrolment really takes off this year for medium-sized employers, and they should already have started preparing for it," he said. "The smaller employers who will now want to get their act together for next year will be looking for reliable off-the-shelf solutions."
"Implementing auto-enrolment is a tricky business: there are plenty of pitfalls, and different people need to come together to get it to work. It will be a challenge for the pensions industry to meet the demand without any slip-ups," he said.
Automatic enrolment began for the largest employers on 1 October 2012, and 'staging dates' by which smaller companies and new companies will have to begin the process run until 2018. Once the process begins, employers must automatically enrol workers into a pension scheme that meets minimum requirements or the Government-backed National Employment Savings Trust (NEST). They will then be legally obliged to make contributions towards the pensions of automatically enrolled workers who do not opt out.
The Pensions Regulator's forecasts are based on companies' payroll information as of 1 February 2012. Although the largest group of employers are expected to begin the process from 2016 onwards, the number of employers expected to do so this year is considerably higher than those that have done so to date. By the end of 2014, all firms with at least 50 employees will have completed the process.
Charles Counsell, the regulator's head of automatic enrolment, said that the numbers would assist pensions and payroll software providers and advisers. However, he noted that the regulator had already been in discussions with them about how they were working to meet growing demand.
"The clock is ticking for thousands of medium-sized employers across the UK – employing 50-250 workers – who need to meet their legal duties to provide a workplace pension," he said.
"Payroll software and pensions providers, financial and business advisers all have a role to play in preparing for the busy times that lie ahead. Now is the time for them to speak to existing clients about what their expectations are. They need to be clear now on what support they can offer employers, which products are suitable for their workforce, the timescales and costs that will be involved," he said.