Have employers gone AWOL on automatic enrolment?

April, May and July 2014 were supposed to see the first real test of automatic enrolment offerings in the market and legislation.  These are the months when the majority of the 35,000 employers that needed to comply with the new pension regulations this year were impacted. 

 

This figure dwarfs the 12,000 employers that have already had to put a Workplace Pension Scheme in place since the implementation of automatic enrolment.  However, commentary from many pension providers suggests that they haven't had the influx of schemes they expected (some less than half). Now this could be because employers are using postponement but according to the law a scheme still needs to be in place from the staging date. Worse, could some employers have gone AWOL and decided not to bother with these new requirements?

 

In some respects this is no surprise. Many businesses are finding it hard to dedicate the time and resources needed to automatic enrolment.  However, the first significant case where a company failed to comply with the rules has already been highlighted by the Regulator.

 

The Regulator is monitoring developments closely. As of the end of March 2014 they had issued 14 compliance notices, one unpaid contribution notice, two statutory inspection notices and one statutory demand.  The Regulator says a common cause of them having to use their statutory powers is insufficient time and resource being given to the planning and preparation for the new duties.

Employers should expect to properly plan for automatic enrolment and put aside a minimum period of between three to six months to deal with these changes. The actual lead in time for planning and implementing these changes will be very dependent on the company's knowledge in how to implement automatic enrolment, the complexity of the employee employment contracts, the assessment of the current employees and their eligibility along with a review of pay structures and payroll arrangements currently in place, in addition a review of any current pension arrangement should take place to ensure that it meets the Governments minimum requirements as a Qualifying Workplace Pension Scheme. 

 

The message therefore is clear. Although it may be a challenge to find time to deal these new rules, employers have no choice or they run the risk not only of fines from the Regulator but reputational damage if they do not fulfil their duties.  They also face the potentially higher costs of complying at short notice through not spending the time required to make the decisions on what is best for their business and their employees.

 

Nick Rudd
Corporate Benefits Director

Telephone:+44 (0)20 7893 3456

Email:  contactus [@] broadstoneltd.co.uk