Many businesses and their employees are aware of the legislation surrounding auto enrolment for workplace pensions. Indeed, the ‘staging’ dates for bigger companies have already come and gone, so quite a few lessons have been picked up along the way. Perhaps your own date still lies ahead, but you’ve talked to your IFA and identified a provider? It would be easy to think you’d done the hard work. But actually, the real issues may still lie ahead.
Data compliance, processing and communication are all potential headaches for businesses. After assessing your existing pension and selecting a new scheme, you need to identify your eligible employees, conduct an impact assessment and then communicate about the staging date. And when the staging comes, you’re into the business of doing the payroll deductions, physically paying the pension provider and again communicating with your staff.
Some accountancy firms provide a ‘bureau’ solution for payroll – overseeing the process on behalf of numerous businesses. If you make use of this kind of service, it certainly reduces your stress, but you need to make sure that your professional partner is geared up to the communication aspects of the new pension regime. Telling employees they are enrolled and when the money’s being deducted for instance, or compiling a remittance file and sending it to the pension provider.
If there is one area of workplace pensions that employers should really focus on it’s the communication part. There is nothing that will create angry, disgruntled staff quicker than deducting money from them without fully letting them know why it is happening. Consider town-hall meetings, presentations or good clear warm up communication letters, all of these things can create an environment where employees understand what is happening and when. Having a corporate benefit partner will ensure these can be run smoothly and with little input or time burden for the employer.
Of course, you can choose to manage the process yourself, but penalties for non-compliance can be up to £10,000 a day, so even the most professional of businesses might want to look at an outsourced option. It soon becomes obvious that the pension commitment itself is only part of the cost of the new legislation. It can potentially eat up time and internal resources. And that’s before you consider the cost of purchasing specific pieces of software or signing a formal outsourcing contract.
The advice from experts, as you might expect, is to think ahead. If you allow 6-12 months to plan before your staging date, you will not only ensure that you select the right pension provider, but you’ll also have in place everything you need for practical implementation.