Pensions auto-enrolment is not something to be taken lightly, especially for smaller firms. Image courtesy of: iStock
The Pensions Regulator
has urged employers to ramp up their preparations for automatic enrolment as evidence emerges that businesses are underestimating the time it will take to get ready.
Rising levels of awareness and understanding of the reforms are reported in research published today, as the UK’s largest employers approach their automatic enrolment staging date.
A significant majority (98 percent) of large businesses – with staging dates between October 2012 and February 2014 – remain confident that they will ready on time, and 82 percent have taken steps to prepare.
But 28 percent of large private sector employers believe automatic enrolment preparations
will take less than three months and 20 percent of large public sector employers suggest it will take less than a fortnight.
Executive director for employer compliance, Charles Counsell, said: “Based on what we’ve seen so far, we estimate that it will take the average large business about 18 months to plan and get ready, including making the necessary adjustments to processes and systems like payroll, HR
and pensions. Leaving it as late as possible runs the risk of making preparations more costly and complex.
“We’re writing to all large employers at the 18 months-to-go mark. Businesses with staging dates in the next 12 months should already have in place a detailed plan of action, including proposals for assessing their current pension scheme for automatic enrolment
or, if necessary, considering whether they’ll be setting up a new scheme.
“All employers will hear from us at least a year before their staging date, so there’s no excuse for not knowing when these duties take effect. We are providing the support that employers will need to play their part in making workplace pensions reform a success for millions of UK workers, via online tools, detailed guidance and a checklist for selecting an appropriate pension scheme.”
The regulator is communicating with employers as their staging date approaches. Large businesses are being targeted now, with smaller companies scheduled to start receiving information on their duties from 2013
. But they don't need to wait for the regulator to contact them – they can find educational materials
to help them with every step of their preparations.
Read a full copy of the research
. Highlights include:
- Spontaneous awareness of changes in pensions law is now at 94 percent for large employers, who will be subject to auto-enrolment duties first. This figure stands at 54 percent for employers of all sizes (up 10 percent since Autumn 2011).
- Prompted awareness of the requirement to automatically enrol, provide a pension scheme and contribute has increased among private sector employers from 33 percent to 41 percent, especially among small employers (from 47 percent to 66 percent).
Confidence in preparations
- Most large employers (85 percent private sector; 81 percent public sector) have taken some form of action.
- 67 percent of large employers had consulted another party, with pensions consultants (25 percent), pension providers (18 percent) and IFAs (12 percent) the main sources of advice
- Nearly a third of all large employers believe that preparing for a/e will take less than three months.
- Half of employers will leave it as late as possible before thinking about getting ready for automatic enrolment.
- 98 percent of large employers are confident that they will have done everything by the deadline set. This figure drops to 85 percent when looking at micro-employers, who won’t need to automatically enrol until 2015 at the earliest.
- 82 percent of large public sector employers believe they’ll be able to deal with the administration of automatic enrolment.