A potential retirement time-bomb in the UK: Auto-enrolment
March 4, 2013|
So why has auto-enrolment been thrust upon us? Well we have a potential retirement timebomb here in the UK. On the one hand people simply aren’t saving enough towards their retirement and on the other we have an ageing population with people living longer. The need for the UK to start saving more towards retirement is undeniable and the auto-enrolment legislation is seen as a politically acceptable start.
However, the legislation places a huge compliance burden upon employers. When you look at this legislation in greater detail it is extraordinarily complicated! The legislators have underestimated the complexity of the relationship that UK plc has with its employees and, in an effort to make sure that “all employees” really means “all employees” they have gone beyond what is generally considered practical. However, whatever the rights and wrongs of compulsion and whatever the complexities, we are now left with the need to comply. Although pensions minister Steve Webb recently announced his department are going to try and simplify things, for those companies with more than 250 employees whose latest staging date is 1st February 2014, this will not change the landscape significantly.
So how has the industry responded? How have the compliance complexities of auto-enrolment been tackled? Why is Premier’s auto-enrolment proposition recognised within the industry as one of the best auto-enrolment solutions from an adviser? The simple reason is that we have looked at this from the Employers perspective with a view to offering a single solution which uses technology to make life simple rather than for the sake of it. Our approach is to work with employers to find the best pension solution for their specific circumstances and to then make compliance as easy as possible.
Many employers are assuming that their payroll provider will have the end to end solution. Unfortunately this is not going to be the case. We have found that at present most payroll providers are still developing their auto-enrolment proposition and their proposition, when ready will not cover the communication and compliance aspects which are key to a full solution. So it is important to ask the right questions and to ensure that you get a full solution.
Indeed some of our clients have even found that their current pension provider is not willing to take on the additional compliance and membership requirements of Autoenrolment. Those that do are often looking to increase their charges. All of this has come as a shock to employers and even more of a shock to employees from whose pension pots the charges are deducted.
We would be very interested to hear from any employer who has been surprised (pleasantly or otherwise) by the answers that they have had from Pension and Payroll providers and any “war stories” regarding Autoenrolment implementation. Generally, we find that the truth is weirder than fiction.