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Don’t underestimate the scale of auto enrolment

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This is a complex task – The Pensions Regulator’s guidance alone stretches to around 500 pages.

Indeed there are 33 different administrative tasks that need to be completed to ensure your business complies with auto enrolment successfully. Our research undertaken with the Centre for Economics and Business Research (Cebr) has estimated that it will take up to 103 man days to get your company auto enrolment ready.

That is a hefty task and even large companies have struggled with it. Last year saw the UK’s biggest companies auto enrolling and 89 of them were investigated by the regulator for potential non-compliance. For smaller companies who don’t have dedicated HR or pensions departments to handle the process, fully understanding what all the tasks are is critical.

In helping many businesses through auto enrolment, we’ve found several areas which are causing particular headaches. We’re highlighting them here to help employers prepare themselves:

Staff communications and support

As employer you are responsible for ensuring your staff understand auto enrolment and the choices you have made for them. Communicating to employees is a significant aspect of auto enrolment preparation – you need to write to all staff within a certain time limit to tell them about auto enrolment and how this affects them. But constructing and sending out communications is not the only process to consider – you will also need to factor in resources to deal with employee queries. Our employee helpline is currently receiving calls from around a third of employees per company – that’s a significant amount of questions for an employer to have to deal with. And they’re not short calls, with each taking on average eight minutes.

Staging isn’t the end of auto enrolment

With so much focus on preparing for your staging date, it’s easy to forget about the ongoing responsibilities – staging is not the end of auto enrolment. On an ongoing basis employers must assess the eligibility of new additions to the workforce as they come on-board and carry out regular assessment of existing employees. This is particularly key if you have a transient workforce – of part-timers, or seasonal workers for example – as there are certain eligibility criteria they may cross.

Responsibility burden

Many of the businesses we’ve spoken to have not realised that part of the auto enrolment ‘job’ that falls to employers is to choose which pension scheme to put their employees’ money into. Choosing where to invest staff’s money, a task usually left to qualified financial advisers, is proving a daunting prospect for many business owners, especially those with no prior experience in this area. We think this is one of the main reasons the majority of employers are saying they will seek professional help in order to comply.

In summary, auto enrolment is a herculean task for employers, and businesses face huge fines if they don’t comply with the legislation. The Pensions Regulator recommends preparing up to 18 months in advance, which for those staging this year means they are already too late if they haven’t started the process. Understanding the complexity of the task, seeking help where you need it and acting now are key. When it comes to auto enrolment, take control, don’t lose control.

David White is MD of Creative Auto Enrolment

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