Recent reports revealed that 1.8m small business and charity employers will need to set up their workplace pension over the next three years (source: The Pensions Regulator). As a financial adviser for over 25 years, I’m concerned that there simply isn’t enough capacity within the pensions industry to cope with this level of demand.
If your organisation is still due to stage, then my recommendation is to get ahead of the game and start planning now. Consider what you’re going to need to do and who within your organisation needs to be involved. And then be brave and kick the process off!
What’s behind the decision to delay?
It interests me why some charity employers put off complying with their auto-enrolment duties, when it is something that no UK employer will be able to escape. My experience of working with the third sector leads me to believe that the main reasons are;
- Apathy – the day to day running of their organisation means there is little energy or enthusiasm left for auto-enrolment
- Fear of the unknown – let’s face it, pensions can seem complicated, dull and daunting. For some employers, the prospect of having to get their heads around pension legislation can be completely overwhelming. And doing nothing may seem easier than facing the unknown.
- Cost – managing the potential costs of automatic enrolment – setting up a qualifying pension scheme and making pension contributions – can be a challenge when charities’ budgets are already stretched. But, in my experience, leaving it to the last minute is often a far more expensive way to approach auto-enrolment.
- Lack of time and resource – charities are under increasing pressure to deliver frontline services to their beneficiaries. Having to apply time and resource on complying with auto-enrolment legislation can be an unwelcome distraction from this vital work.
The financial implications of delaying
While the reasons for delay are understandable, it’s important to remember that doing nothing is not an option.
In the first three months of the year, The Pensions Regulator (TPR) issued 424 fixed penalty notices and 5 escalating fines against employers for auto-enrolment failures. On top of these fines, the watchdog ramped up its action and issued 1,682 compliance notices, 22 unpaid contribution notices, and 6 statutory inspection notices. Failure to comply can be very costly.
Benefits of early planning
Taking the time to prepare for your auto-enrolment duties now, even if your staging date may seem a long time away, can be highly beneficial. Getting ready early can help;
- Get a qualifying workplace pension scheme in place, ahead of your staging date
- Allow you to manage the costs more effectively
- Give you plenty of time to communicate what is going to happen to your workforce so that they are on board from the start
- Provide you with plenty of time to manage the process efficiently. Including allowing time for any decisions to be ratified by your trustees
Find out more
Foster Denovo Ltd has developed an award-winning non-advised auto-enrolment tool, Enrolsme, especially for charities and SMEs. Visit www.enrolsme.com to find out more.
Attend a free workshop
Plus, ACEVO and Enrolsme are running an exclusive auto-enrolment workshop for ACEVO members at the Gherkin on 15th September. It’s free to attend and you can book your place here