Are 500K employers ready for auto enrolment?

1 February 2016

2016 will see 500,000 employers begin auto enrolment. But are they ready? We're now just after the halfway point of auto enrolment and so far the statistics indicate it has been a big success. Of those employees that have been auto enrolled, just 10% have chosen to opt-out, which is down from the Department of Work and Pensions original estimation of an auto enrolment opt-out rate of 30%, which means thousands more people are now saving for retirement than ever before. The auto enrolment process has also not posed too many problems for employers either so far, with a relatively small number having action taken against them for failing to comply with auto enrolment legislation.

However, it must be remembered that the auto enrolment has begun with the largest companies in the UK, which actually means just 60,000 companies have auto enrolled so far, companies that have the knowledge, resources and staff (or at least the access to knowledge, resources and staff) to cope with the implementation of auto enrolment comfortably. This year will see a significant ramping up of the numbers of businesses auto enrolling, with 500,000 small and medium sized businesses expecting to auto enrol.

This significant increase in the numbers of businesses auto enrolling, along with the fact that many businesses may not have staff with the knowledge and resources to deal with auto enrolment comfortably. According to research, the vast majority of employers want to do the right thing by their employees and implement auto enrolment correctly, but there are indications that smaller employers are much more likely to leave their auto enrolment preparations to the last minute and a small minority may not act in time at all. This risks action being taken against them for failing to comply with auto enrolment legislation.

Charles Counsell, the executive director for auto enrolment at The Pensions Regulator said: "We are concerned that a minority of smaller employers are leaving things too late and struggling to comply on time. We are helping employers avoid this by alerting them in good time to their duties and giving them the tools they need to meet them. Employers should start planning 12 months before their duties start and make our website their first port of call."

The Department of Work and Pensions are playing their part in raising awareness of auto enrolment, and 2016 will see the return of Workie, the the giant furry character who has been used in a variety of media campaigns to raise awareness of auto enrolment. Up to half a million businesses will receive reminder letters about auto enrolment this year and it will be hard to avoid Workie in the media with the DWP's £8.5m advertising budget.

Charles Counsell from The Pensions Regulator said: "Workie is back again this year on TV, radio and across social media to remind employers they cannot ignore the workplace pension. Our message to employers is to look out for letters from us and act on them. Those whose duties start in the first three months of the year should now be well underway with their plans."

2016 will be interesting times for auto enrolment.

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