Some 22,000 charities are due to stage and meet their automatic enrolment obligations from 2015 and onwards. Ian Bird, Business Development Director at ACEVO’s Corporate Partner Foster Denovo Ltd, warns that delays could be costly.
Hundreds of thousands of small employers across the UK have either started to, or will shortly be, receiving letters from The Pensions Regulator (TPR) telling them of their automatic enrolment duties as an employer. As TPR states: ‘Every employer, with at least one member of staff, must automatically enrol those who are eligible into a workplace pension scheme and contribute towards it.’
Whilst awareness of automatic enrolment has increased in the sector, I would argue that there are still high numbers of organisations that are unsure of their own set of obligations. As a result, I believe that many of TPR’s letters could – sadly – go left unread.
Charity leaders are naturally focussed on running their organisations and putting a pension scheme in place is probably not high on their priority list, but I’d argue it should be. Some employers may be forced to leave their automatic enrolment responsibilities until they really need to, and choose to file the letter away, or to mark a calendar reminder for when their automatic enrolment staging date becomes imminent.
As I have said before, when it comes to automatic enrolment preparation is key, and planning ahead when it comes to budget and resourcing is vital.
Charities should pay close attention to the (recent) correspondence from TPR, which advises on the relevant staging date and the need to be prepared for then. Each organisation is also requested to nominate an additional member of staff or supplier to support in implementing the duties.
Foster Denovo has created an online virtual consultant to automatic enrolment (www.enrolsme.com), for small businesses and charities. Matthew Mitten, Enrolsme Director, believes that charities need to consider what the potential cost implications of automatic enrolment will be. He adds: “Whilst most fully support the concept of automatic enrolment, there is no avoiding the fact that employers will incur costs as they prepare to comply with the legislation. Delaying the automatic enrolment process will – inevitably – cost charities and the sector even more.
“There has also been much debate over whether the pensions industry will face a capacity crunch – where thousands of organisations are looking to stage at the same time. Only time will tell if this will be the case – I certainly hope not.”
In November 2014, we saw TPR beginning to issue the first fines to those employers who failed to comply with automatic enrolment legislation, with more on their ‘watch-list’. Although the initial fines have, at this stage, been limited to a small number of employers, those still to stage take heed of the warning that the regulator will take action if needed.
TPR’s letters and action are welcome, but I would argue that the organisation needs to be doing so much more to raise the profile of automatic enrolment; the fines for avoidance and the length of time it takes to put a pension in place. Letters in isolation are simply not enough. TPR, and the sector, need to stress the importance of acting now and avoiding unnecessary costs. The time has come for greater clarity and improved communication at all levels. Only then will the messages filter through.
For charities due to meet their obligations, automatic enrolment undoubtedly represents a significant burden. Early planning is essential to make this process as easy as possible and Enrolsme will be there to support the thousands of charities as they look to comply over the next few months and years, whether planning early to spread the costs and resources, or as a rescue package if you have left it late and need to stage as quickly as possible in order to become compliant.
So, when the letter lands on your desk, don’t delay. Take the opportunity to kickstart your automatic enrolment strategy into action.
Ian Bird is an Equity Partner and Director of Business Development for employee benefits and charity solutions businesses at Foster Denovo Ltd., an ACEVO Corporate Partner.