Business clinic: Auto enrolment is much more than just compliance

Much has been written about auto enrolment over the past few years. Most authors have focused on the costs to employers and the potential penalties payable for non-compliance, this in turn has created a negative view of auto enrolment in general.

By Antony Keen, PM+M.

Whilst there is no doubting that the new legislation is an additional cost to employers, and the legislation can be onerous, it is not all bad news.

Auto enrolment is an opportunity for employers to engage with their employees and provide a benefit that is of real value.

It is worth remembering that auto enrolment was introduced to combat the dual effects of increasing longevity and low pensions savings. In our experience the vast majority of people know they need a pension and intend to join one, but never quite get round to it.

Employers therefore have the opportunity to create a sizable amount of good will with employees, by providing access to a quality pension scheme and advice.

For most employees their first conversation on auto enrolment will start off with a negative statement, something along the lines of: "You will have to put x% of your salary into a pension scheme and your employer and tax man will also contribute.”

Perhaps a more positive spin would be: "For every pound you put into your pension another pound will be added and this will then grow, tax free, until retirement"

Or to put it even more simply: double your money!

It is also true to say that many people will have purchased a pension and then never reviewed or met with a financial advisor since the day they made that first premium.

At PM+M we only set up quality pension schemes that include a regular review service, with every employee being given the opportunity to meet with an advisor on a regular basis to discuss their retirement planning, utilising our bespoke one page pension planner.

The pension planner shows the employee their estimated income in retirement and can be used to look at “what if” scenarios, such as the effect of increasing premiums and or taking earlier or later retirement.

So whilst auto enrolment is something of a burden on employer, it can be turned into a positive by engaging with employees and providing access to a quality pension scheme and review service that employees will value and engage with.