Auto Enrolment Hits 4 million, is this Success?
Last month it was announced that 4 million people have now been automatically enrolled into the government’s latest workplace pension scheme (The Actuary). But does this mean auto enrolment is a success and if so, why are businesses struggling to comply?
Auto enrolment, the biggest change to the UK’s pension system, was clearly a necessary step as many in the past have failed to prepare effectively for retirement.
“This latest milestone figure shows how saving in a workplace pension is now becoming the norm.” Steve Webb, there’s little doubt that these changes will improve employees’ opportunity to save with 9 out of 10 employers agreeing that auto enrolment is good for employees (Corporate Adviser).
But what are the realities of implementing this scheme? From October 2012 when the first employers staged for auto enrolment, to most recently in July when we saw the latest staging date come with a crash. It’s clear that it was never going to be easy to set up every business in the UK for one pensions scheme that requires great preparation and continual maintenance and it’s clear that even now, businesses are still struggling. From the beginning of March, The Pensions Regulator had investigated over 590 cases of non-compliance and of the 22,940 businesses that had reached their staging date by the end of May, just 15,099 have registered with The Pensions Regulator to verify their compliance.
It’s plain to see that many businesses are uninformed as to the full extent of the auto enrolment process. With Simon Kew stating that “many businesses are lacking in time as well as inclination to wade through over 500 pages of guidance issued by the regulator”. Auto enrolment is emerging to be an even bigger mountain to climb for smaller organisations as they approach their staging date – David White “It will be harder for these small firms to negotiate their way through the auto-enrolment maze”.
As preparations are in place for the Pensions Regulator to “crack down” on those flouting auto enrolment legislation, it’s time to start welcoming the auto enrolment process and preparing your SME for your upcoming staging dates.
Let Ernest Grant help your business with the auto enrolment process.