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October 24, 2014

Employers leaving auto-enrolment too late

Employers leaving auto-enrolment too lateMore than a million small businesses could be heading for an auto-enrolment pension crisis, according to new research.

Research by Defaqto on behalf of NOW: Pensions has found that many businesses are leaving it too late to prepare for auto-enrolment. And from June next year, another 1.2 million small and micro businesses will embark on auto-enrolment.

The survey found that 72% of financial advisers say employers are coming to them for advice either very close to, or after, their auto-enrolment staging date. And the majority (87%) are concerned that employers lack the knowledge to make informed decisions on the appropriate auto-enrolment solution for their employees.

Of 244 advisers questioned, 50% said firms have turned to them very close to their staging date.

Scott Gallacher, chartered financial planner at Rowley Turton, said: “If these larger employers with well-resourced HR departments can’t adhere to the rules, it does not bode well for 1.2 million of the UK’s small and micro businesses.”

There are also widespread fears that the pension industry could become overwhelmed as large numbers of firms have to comply in the same timeframe.

Gallacher warned: “With a predicted capacity crunch looming as traditional pension providers shun the smaller end of the market and many financial advisers choose not to advise on auto-enrolment entirely, smaller employers need to act now to avoid potential non-compliance fines of £500 per day.”

Morten Nilsson, CEO of NOW: Pensions, said: “As small and micro companies begin to tackle the complexities of auto-enrolment, many will lack the know-how, experience and resources required. We urge those who will begin staging next year to plan ahead.”

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