It’s been two years now since automatic enrolment first came into force. Since then, regular press coverage and the Government’s “We’re all in” campaign has increased awareness of this legislation amongst employers and their workforces alike.
Larger charities have already firmly embedded automatic enrolment within their organisations and initial results show that many staff that had previously shied away from retirement planning are now saving towards their financial futures. This is a positive step but for those smaller charities that are still to comply, what lessons can be learned?
I think one of the most important points to highlight here is that the numbers of smaller employers still to stage is significant. It’s predicted that in 2015, there will be an average of 40,000 employers staging each month, increasing to an average of 135,000 a month in 2016 and 2017. If your organisation is still to stage, then consider early on whether you are likely to require any external help, as pension providers, consultants and advisers are likely to be in demand.
I would encourage charities to plan ahead – on average we recommend clients allow at least 6-9 months to plan for automatic enrolment. In my experience, the earlier you prepare the better.
Get a project team together of the key people within your organisation – those responsible for Finance, HR, IT and Pensions – and ensure that everyone knows the role they will play from the start. Consider also whether you need to involve your trustees in the process. Put together a project plan and set realistic timescales.
One of the biggest mistakes that many employers make is assuming that they’ll be able to use their existing pension scheme for automatic enrolment. When it comes to pensions, don’t assume anything. We’ve seen first hand that some mainstream pension providers are refusing to allow customers to use their existing pension schemes for automatic enrolment. Let your provider know early on in the process of your intention to use your existing scheme for automatic enrolment and indicate the likely age, salary and contribution levels of those that will be enrolled in the pension. Then, make sure you get written confirmation that you will be able to use your existing arrangements.
Equally, if you need to set up a new pension scheme, make this a priority. Every employer is entitled to use NEST (www.nestpensions.org.uk) but this might not be the most appropriate solution for your organisation. In addition to mainstream pension providers, you may want to consider the People’s Pension (www.thepeoplespension.co.uk) or NOW: Pensions (www.nowpensions.com).