FORWARD PLANNING KEY FOR PENSIONS AUTO-ENROLMENT, says Iain Fox, director at Bath-based employee benefits specialist Fidelius in the first of Bath Business News' weekly Expert Panel series . .
There have been plenty of column inches dedicated to the introduction of pensions auto-enrolment. Much of the em
phasis since the launch on October 1 has been on how auto-enrolment – which legally requires companies to enrol qualifying staff members in a pension scheme – only currently applies to the country’s largest employers.
But small and medium-sized businesses must think about auto-enrolment sooner rather than later if they are to make the most of this new pensions regime.
Over the next five years all companies will be phased into the new pensions system as they reach what the Government is calling their ‘staging dates’. If employers are to be ready for their staging date and the extra administration – and opportunities – that auto-enrolment provides, then SMEs should be getting their thinking caps on now.
Early budgeting is crucial. There may be a number of pay/remuneration reviews between now and most employers’ staging date. Splitting the remuneration pot between pay rise and increased pension contributions to meet the minimum requirements of auto-enrolment will mean an employer can meet legislation early or over a longer period within a clearly defined budget.
While the UK’s smallest businesses won’t, in some cases, be required to auto-enrol staff until 2018, those businesses that are ahead of the curve when it comes to planning for the new pensions regime will be best-placed to cope with the ramifications.
It’s important to emphasise that the introduction of auto-enrolment heralds new opportunities for companies as well as new responsibilities. Fidelius has already worked creatively with businesses across the South West on their employee benefits packages to help them implement auto-enrolment, with positive results for staff.
Government figures show that there is undoubtedly a savings gap caused by many workers not planning far enough in advance when it comes to their pension. Ahead of the launch of auto-enrolment on October 1, the Department of Work and Pensions released figures showing that 11 million UK workers faced the prospect of an inadequate income in their retirement. Auto-enrolment is intended to help plug that gap, but for it to work best for both company and staff, forward planning is crucial.
At Fidelius, we have been busy highlighting the implications of auto-enrolment to businesses in Bath and beyond. We held a free seminar for HR managers and business owners at The Recreation Ground in Bath and published a seven-point guide to help companies navigate their way through the Government’s shake-up of the pension system.
Our plan takes employers through the switch to auto-enrolment. The first step is about a firm identifying when they need to act, the seventh about how to make the correct pension contributions. Good communication with employees during the process is crucial, and the plan advises companies how to do that. For more information, visit www.fidelius.co.uk.
