Companies with between 250 and 799 employees must meet the auto-enrolment obligations on their staging dates between now and February 2014. Those with between 90 and 249 employees will be the next group of employers to come into scope in April and May 2014 with smaller companies following soon behind them. Our experience when discussing Auto-Enrolment with employers has been that a significant number are burying their heads in the sand, choosing to leave the planning right until the last minute.
This approach is likely to lead to a turbulent road ahead for these companies, who probably don’t have the infrastructure in-house and even if they do, they will struggle to be able to implement Auto-Enrolment last minute.
So what’s all the fuss about…..
Well, there is a pension plan to put in place or at the very least a validation of an existing pension scheme against the legal minimum requirements.
There is a guaranteed increase in company administration and data processing.
Last but not least, and possibly the most important, there will be a significant increase in cost to the business. The CEBR estimates the one-off costs of implementing Auto-Enrolment for businesses of around 250 employees could be as much as £15,600. This does not include the cost of employer pension contributions, which will be a new employee benefit for many companies of this size.
The most important questions that small and medium sized business should be asking well ahead of their staging date are:
- How do we source the required expertise to explain the requirements in plain English and help us through the process?
- How will we deal with the data requirements and the increase in administration; in-house or outsource?
- What is the likely cost of Auto-Enrolment and how can we plan ahead to mitigate this as far as possible?
- How do we engage with our staff to ensure that we get the best value from the additional cost of this employee benefit?
The key to success is to ‘Plan, Plan and Plan again’ and this can be done well ahead of the staging date – the earlier the better. Procrastination is likely to lead to a more stressful Auto-Enrolment experience, may reduce the pool of expertise companies will have to choose from and is highly likely to increase the overall cost.
Don’t let the Auto-Enrolment train leave the station without you or you risk hefty fines from The Pensions Regulator for non-compliance!
Contact us now for a no obligation discussion about Auto-Enrolment.
By Fiona Cowie, Essential HR Solutions