The UK pensions landscape continues to change and the challenges associated with enabling more UK workers to save for retirement remains significant.
The next few years are crucial for the Government's landmark savings programme, as the UK's smaller companies reach their auto-enrolment 'staging' dates between now and 2018. ‘Staging’ is the date that employers become subject to their new duties in order of the size of their workforce.
Thousands of small and medium-sized businesses have now started to automatically enrol their staff into pensions - but some feedback I have seen shows that many employers are still not ready to launch their schemes. It seems as though many are leaving it very late to get organised, with some not having selected a pension provider while others are apparently not yet aware of their staging date.
The introduction of automatic enrolment (AE), which will apply to all existing employers by February 2018, and new employers thereafter, has started to transform the UK’s long-term saving culture on a previously unprecedented scale. The proportion of employees in a workplace pension scheme has risen for the first time since 2006.
Firms do have the option of requesting to postpone their duties for up to three months after their staging date if they are not ready, but it is important to get the research done early and determine the support that is needed and who is going to provide it.
If this is coupled with the recent relaxations in how individuals can take their pension pots, announced by the Chancellor of the Exchequer in the March 2014 budget, then the outlook for pension saving should be very healthy. As usual, the difficult bit is communicating what can sometimes be a complex message!
MPS takes great care with the communications aspects and our aim is to present the subject in a straightforward manner and we have regularly received positive feedback on how we go about this particular task. If scheme members understand and appreciate the benefits available it makes the whole process much simpler.
In addition to our communications services, MPS also provides assistance to employers for their AE duties and this includes the research, planning and implementation aspects to ensure a successful outcome for both employer and employee. We also offer assistance with the vital liaison between the chosen pension provider and the payroll functions whether ‘in-house’ or external.
The first two years of auto-enrolment has seen the biggest employers reach their staging dates, and some have stated they would have done things differently plus taken on extra staff to deal with the administration workload. A number have said they regret their approach to auto-enrolment and wished they had given themselves more time.
This means that the smaller employers are perhaps underestimating the workload coming their way and the true impact that auto-enrolment will have on their systems and processes.
MPS suggests that employers seek suitable support services to suit their requirements in good time after having established their ‘staging’ dates. This can be found on the Pension Regulator’s website
The Pensions Regulator recommends that a 12-18 month lead-time is appropriate for this work and MPS fully endorses this. There will be very large numbers of employers requiring assistance during the course of the next few years that will put pressure on the pensions industry to support a large influx of new schemes.
MPS would be pleased to assist employers with their upcoming duties and would welcome your interest in our services.
If you would like to get in touch please contact us