Business Clinic: Be ahead of the auto enrolment rush
2014 is a big year for workplace pensions as the “auto enrolment tsunami” hits small and medium sized businesses.By Paul Jackson, Taylor Patterson.
In 2013 an estimated 3,500 employers staged, however, 2014 will see a tenfold increase to almost 35,000. Move forward to 2016 and this figure starts to approach 500,000 employers.According to research from Now: Pensions, more than 50% of advisers think they will struggle to meet demand from employers staging in 2014.
This surge in demand is arguably the greatest challenge that pension providers, advisers, the regulator and employers will face.At Taylor Patterson we are already seeing a change of heart from private sector providers as they are being more selective about which customers and schemes they want to deal with.
The potential impact this will have on organisations looking to source pension schemes is quite detrimental. With a reduction in choice, these providers are potentially creating a bottleneck in the supply chain and employers are finding this a costly corner to be in.According to the National Employment Savings Trust, 52 per cent of employers staging this year said they had a good understanding of pensions, compared to 96 per cent of those firms who staged in 2013.
This demonstrates that the larger companies have the resources to deal with auto enrolment, whilst the SME sector will rely on advisers to help them. With advisers started to getting inundated with queries SMEs would be best placed to start their planning process well in advance.Auto enrolment for most employers has so far been a success, however, as SMEs approach their staging date it’s clear that this momentum will only be maintained through prior planning. It can often take 12 months to fully prepare and implement an auto enrolment scheme, to avoid any nasty shocks, providers, advisers and employers need to engage effectively and ensure sufficient time is given for the appropriate level of preparation to take place.