As nearly 2m smaller employers reach their auto-enrolment staging dates, Smart Pension's Griselda Williams asks what is being done to support them?
The Pensions Regulator has worked hard to provide clear and helpful guidance to support all participants through auto-enrolment regulation.
It is focused on educating and enabling employers and their advisers rather than enforcing fines and other disciplinary measures.
In spite of this, experiences at the coalface have tested the extent to which legacy schemes and systems can undertake the hand-holding employers need to get through compliance.
Employers need a huge amount of support to transfer the volumes of employee and contributions data that underpin a smooth transition.
Two waves
The first wave between 2012 and 2014 represented just 3 per cent of the total number of employers in the UK and boasted the largest workforces.
Schemes must provide administration platforms, support and services that can cope with the tsunami of 1.8m medium, small and micro-employers due to stage between now and early 2018
With this wave came the arrival of supertrusts and legacy schemes.
These are well placed with their existing platforms and support processes to absorb employers with sophisticated internal administration teams to manage their large volumes of eligible employees.
These auto-enrolment providers could afford to take the time to provide a bespoke hand-holding service and were dealing with individuals fluent in the language of pensions and financial administrative processes.
October 2015 marked the halfway point for auto-enrolment compliance and this second wave faces a new range of challenges.
Schemes must provide administration platforms, support and services that can cope with the tsunami of 1.8m medium, small and micro-employers due to stage between now and early 2018.
Supporting SMEs
Read pensions minister Ros Altmann's latest column on what the government is doing to ramp up support for smaller employers.
Most of these SMEs and micro-employers do not have the luxury of an in-house accountancy, payroll or HR administration infrastructure.
Each requires a high level of individual support, education and guidance, while only bringing in low volumes of one to 50 enrolled members.
Barriers to entry
We are already seeing a surge in employees making whistle-blowing reports to the regulator about their employers’ failure to comply with legislation.
Figures show a jump in complaints of around a third in a year, from 1,497 in 2013/14 to 1,985 in 2014/15.
Two-thirds of small and micro-employers still do not know the exact date they need to comply with the new workplace pension rules, and this is despite receiving letters stating this information.
At the very moment workplace pension schemes need to be going that extra mile to support this SME and micro-employer community, we are already seeing legacy schemes creating barriers to entry.
Some of the more established pension providers are actually turning small employers away because their systems cannot justify the economics of supplying the same level of service in exchange for smaller volumes of members.
Learning lessons
However, new mastertrust schemes are emerging having learnt from the experience of the first wave of pension providers.
Following the regulator’s lead, processes can be tailored to the specific needs of different types of employer and business sectors.
For example, some mastertrusts are developing tools that will relegate the dreaded csv files for communicating employee and contributions data to ancient history, soothing the migraine that is punishing payroll departments.
Most importantly, new platforms can provide online end-to-end auto-enrolment support and administrative services that do not incur charges.
These schemes are surpassing expectations, finding solutions to the existing obstacles and providing the next generation of support that will transform auto-enrolment from an administration headache into an easy-to-use, everyday process.
Griselda Williams is business development director at Smart Pension
