Business clinic: Don't forget the ongoing admin of auto enrolment
During 2014 there will be an increase in the number of employers reaching their staging dates, but I have started to see pension providers being more selective about taking on new schemes.By Dave Gleeson, a Chartered Financial Planner, Moore and Smalley.
This is because companies with fewer employees, or those with lower paid employees, will not be profitable for providers.I believe that this will mean that many companies could be forced to use NEST (National Employment Savings Trust) as their pension scheme provider. NEST is the government-sponsored pension scheme that has a public service obligation to accept any employer.
Whilst NEST has been designed as an auto enrolment solution, unlike other providers, it provides no administrative support. You will therefore have to manage the scheme online with no support in complying with the regulations (other than some templates and a manual) and no help with budgeting for the costs or advice on the right contribution structure.The complex regulations, which run to more than 300 pages, could possibly give rise to non-compliance if you are not conversant with all of the rules. The Pension Regulator is already investigating a number of potential non-compliance issues for larger employers. If larger employers, with greater administrative resources, are finding compliance with the regulations challenging then I have to surmise that smaller firms will find this even harder.
Auto enrolment is not simply ‘setting up as a pension scheme’ – it has complex detailed regulations. So whilst ignoring it until the last minute may seem like a good idea, you do not want to find yourself with no time, little choice of pension provider and potentially limited access to independent financial advice as demand for solutions increases. I understand that it can be difficult to find the time when running your business on a day to day basis, but I do strongly recommend that you plan ahead. Whether you decide to ‘go it alone’ or seek professional advice I suggest that you begin six to 12 months before your staging date.