UK firms urged to act sooner rather than later on auto-enrolment preparations

Out-Law News | 12 Mar 2014 | 4:25 pm | 2 min. read

Many smaller employers are still uncertain about when they will need to begin automatically enrolling their workers into a suitable pension scheme, according to new research by the Pensions Regulator.

It is urging the thousands of firms with between 50 and 89 workers that are due to complete the process this year to choose a suitable pension provider and put payroll software in place if they have not already done so, or risk enforcement action and possible fines.

Charles Counsell, the regulator's executive direct of automatic enrolment, said that although 82% of small employers were now saying that they were aware of the changes, 47% did not know when their own 'staging date' was under the rules. For 'micro' employers, with five workers or fewer, knowledge of their staging date fell to just one in four firms, he said.

"Most medium employers due to automatically enrol between July and early 2015 know about the changes in the broadest sense, but many still haven't considered exactly what they will need to do and by when," he said. "It really is time to act. Too many employers still think they can leave it as late as possible and don't understand the actions they need to take."

"Around half of employers told us they will be relying on an adviser to help them meet their duties. I would urge those employers to start to investigate who can help them, when and how," he said.

Counsell was commenting as the regulator updated the case studies section of its website to include examples from smaller employers that had chosen to implement the reforms early, giving them time to check their payroll systems and software needs.

Automatic enrolment began for the largest employers in October 2012, and will ultimately result in up to 11 million people saving more towards their retirement or saving for the first time. Under the programme, more than 1.3 million employers will have to automatically enrol workers into a pension scheme which meets certain minimum requirements, and will be legally obliged to make contributions towards the pensions of automatically enrolled workers that do not opt out of the scheme.

According to the regulator's latest 'employer awareness' report (69-page / 906KB PDF), the number of small employers that knew their staging date remained "largely unchanged" since previous research in Spring 2013. Comparing those employers due to stage this year with large employers interviewed in a previous survey at a similar distance from their respective staging dates, the regulator found that the smaller employers had significantly lower levels of understanding about the reforms but similar levels of awareness.

Knowledge of the employer's requirement to complete registration with the Pensions Regulator ahead of automatic enrolment remained the aspect of the reforms least known to employers of all sizes, according to the research. It found that 38% of smaller medium employers were aware of the registration requirement, falling to 16% of small and 5% of micro-employers.