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Unease over the “staging phase” of pension auto-enrolment

by Bill Monty | Jul 18, 2014
  • There has been a lot of discussion lately regarding a lack of governmental support for employers who have yet to comply with auto enrolment criteria, with many employers expressing concern over the cost involved and a general lack of understanding.
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    According to the Financial Times Adviser, chief executive of the Chartered Institute of Payroll Professionals (CIPP), Lindsay Melvin, recently voiced his concern at a regional meeting in London. He stated that employers are not being adequately provided for, and that government and industry need to work together better if they intend to provide adequate support for SMEs. What that support might entail is still unclear, but one thing has been made blatantly obvious: a lot of smaller companies are not prepared to cope with the added complication and workload that this new scheme will bring.

    With even large companies like Dunelm not having the wherewithal to get it right first time, it seems that the government might be asking a little too much from the private sector.

    This is such a concern that the UK’s official pension regulatory body has announced that SMEs should seek the help of Independent Financial Advisors (IFAs) to make sure that they avoid any potentially expensive hiccups during enrolment. While this is definitely sound advice, employers should bear in mind that as more SMEs enter their staging phases, it will become increasingly difficult to find a pension provider that is still taking on new clients. Many have started to turn away organisations with less than six months until their staging phase begins, or that do not meet their minimum contribution levels, while they deal with the huge volumes of existing applicants.

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    The added cost of enrolment

    In addition to general feelings of uncertainty and added pressure due to time constraints, auto-enrolment comes with a price tag. The Centre for Economics and Business Research places the initial enrolment fee at an average of £11,300 in man hours for a typical firm with one to four employees. Combine that with the pressure of making sure that you, as their employer, make the right choice in pension schemes for your staff and understand what options each staff member has (with regards to opting in and out of the pension plan), and it’s understandable why SMEs across the UK are dreading the coming changes.

    On top of that, there is also the issue of automatic enrolment duties. Administration of the auto-enrolment pension scheme doesn’t just stop once you have enrolled all your staff; it becomes a part of your business as usual. You will have to keep paying contributions, update your staff records, monitor changes to age or earnings, and manage any opt-in or opt-out requests. That means added workload and more opportunity for error, which can result in hefty fines for non-compliance. 

    At this point in the staging process, a service provider may well be the only way forward for a business that has less than six months before the start of its staging phase. IFAs such as Sable International's wealth division have extensive industry knowledge and contacts and are best placed to ensure that your auto-enrolment duties are met in a timely manner and in a way that will benefit your employees.


    We are one of the few advisory firms able to offer a complete outsourced auto enrolment service. We do this by proactively managing your auto enrolment project and driving the engagement with you. For more information about how we can help you meet your auto enrolment responsibilities, please email us or phone us on +44 (0) 20 7759 7519.

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    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

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