Even before he received notification of his staging date, PromoVeritas managing director Jeremy Stern had started to look into what he needed to do in order to comply with auto-enrolment legislation, surveying his 19-strong workforce assess their requirements and enlisting the help of his finance manager Dara O’Callaghan to identify suitable pension providers and deliver the offering.
“The company grew out of a lack of awareness of creative firms’ legal obligations under the advertising standards legislation. We protect their reputations by making sure their prize draws and promotions are fair and compliant,” Stern explained.
“As a result, we’re very aware of business rules and regulations, so I’ve been aware of auto-enrolment and thinking about the cost implications for a while, and my first thought was let’s do it early.”
Financial planning for the cost of compliance in advance of beginning the process has allowed him to limit the impact on his firm’s bottom line. “The set up cost was only around £350, but there are also additional fees to consider going forward.
“We’ve budgeted for costs of £10,000 a year, and we’re emphasising to new hires that they are getting a pension on top of their salary.” Stern believes this is important, communicating with fresh hires that the business is backing their pension pot and futures.
Now, with just under six months to go until he is legally obliged to enrol his workers in a pension, Stern estimates he is about halfway through the process. He is now focusing on meeting the auto-enrolment needs of employees who already have an existing pension and want to be able to manage their whole pot in one place – as well as putting procedures in place to make sure he continues to comply with his auto-enrolment obligations in the future.
The first port of call for O’Callaghan was government-backed sources of information like The Pensions Regulator, with the HMRC website and Money Advice Service also cited by her as helpful. “I came into this completely blind, so my decision to choose Aviva as our pension provider was based on reading about the company in official guidance.”
The biggest challenge for Stern has been communicating developments to staff in a neutral manner, given the close-knit nature of small business teams. “We’re all in one open-plan office, and I’m conscious that I’m a bit of a cynic because my personal pension pot is down in value at the moment,” he said.
“Some of my younger staff have asked me whether they should opt-out, and I explained that it was a decision they have to make for themselves – but I’m worried about what will happen if they end up losing money by not staying enrolled.”
As the market matures, Stern hopes that platforms for comparing the returns and costs of different pension providers will make it easier for employers to make the best decision for staff.
“It’s hard to compare things like set-up costs and management fees, because a small annual difference in the latter will make a big impact over time. Now they’re enrolled, I want to be able to reassure my staff that their pension will provide a good income for them in retirement.”
In partnership with The Pensions Regulator, we’ve got auto-enrolment advice and guidance for SMEs, from SMEs.