There's no doubt about it, 2016 is going to be a big year for auto enrolment, as the latest figures from The Pensions Regulator indicate that it is preparing to process its largest volume of companies into the auto enrolment fold.
Auto enrolment was introduced in 2012 and has already seen thousands of midsize and large business go through the process, largely without issue. The vast majority of businesses have auto enrolled their staff smoothly, with relatively few notices or fines to be issued and there's no doubt that it's been successful so far, with just a 10% dropout rate, far below the rate first predicted.
However, now we're seeing the UK's small and micro businesses starting to auto enrol, and that means a big increase in the numbers auto enrolling than we have seen already. To put it into perspective, this time last year whilst it was still larger businesses auto enrolling, 3400 businesses went through the process during the last quarter of 2014/15. In the same period this year, 110,000 small businesses are expected to auto enrol, a huge increase in numbers. That means with so many employers gearing up to go through the auto enrolment process, there will be thousands of employers facing increasing pressure to ensure that they have planned ahead and made sure they are organised and ready to auto enrol their employees into occupational pension schemes. Looking beyond Q4 2016/16, The Pensions Regulator has stated that it expects over 600,000 small and micro business will be processed by 31 March 2017.
This will undoubtedly place a pressure on small and micro businesses to comply with legislation and experts, including the Regulator are urging firms to begin engaging with auto enrolment as early as they can, as planning and preparation is vital in ensuring that they fully comply with auto enrolment legislation and make sure their eligible employees are placed into a suitable occupational pension scheme without delay.
Companies that choose to ignore auto enrolment, undertake it late, don't pay across contribution or don't comply in any other way can face action from The Pensions Regulator which can include fixed fines of up to £50,000 and daily fines of up to £10,000 per day.
Up to now auto enrolment has gone relatively smoothly, but 2016 will represent its biggest challenge to date.