New research from JLT reveals extent of apathy towards auto-enrolment
In spite of ever increasing publicity around auto-enrolment, many companies in the South West are running the risk of receiving fines in the tens of thousands of pounds, according to JLT Benefit Solutions.
The results come from the latest JLT 250 Club survey of larger employers. The survey tracks opinions and thoughts of larger companies relating to pension issues and found that an alarming 51% of employers in the South West had not yet decided how they were going to comply with their new auto-enrolment pension obligations. Failure to do so could result in fines from the Pensions Regulator for every day of non compliance of up to Â£10,000 per day.
Raymonde Nathan, Director of Consulting Practice South West at JLT Benefit Solutions, comments:
“The deadline for compliance for many local employers is looming and some will have deadlines of as early as this year. With an anticipated lead time of 18 months often required to develop systems for compliance, the time to act for many local employers has already arrived.
“For many local employers this will be the single most important change to their cost structure in recent times, both in terms of the pension contributions that must be made and the costs of developing a system for compliance.
“Even once the pension’s vehicle of choice is chosen for auto-enrolment, a huge amount of work needs to be done to define processes and identify and implement automated solutions.
“We are concerned many companies are leaving this too late to comply with their obligations and risk a race against time to avoid a hefty fine.”
A new approach to pension saving in the UK was introduced by the Government in October 2012 and will see millions of UK workers auto enrolled and contribute into a workplace pension scheme. Employers will also be required, by law, to contribute on their employees’ behalf.
Aside from the cost implications and time pressures, local employers will also need to carefully consider how they manage their employees’ take home pay expectations with clear and engaging communications. Following auto-enrolment into a work based pension scheme, all employees will see a reduction in their net take home pay.
“The current economic environment and continued drive to cut costs may have resulted in auto-enrolment not being considered as a top priority by many local employers. The truth is that the costs of compliance remain the same whenever they are met, unless of course a lack of planning results in an unexpected and large fine."