Are We Going To See An 'Emergency Pause’ Of Auto Enrolment?

1 December 2015

2016 will see 500,000 employers begin auto enrolment With news that The Pensions Regulator has increased its estimate of the number of employers subject to auto enrolment by 37% to 1.8 million, it has emerged that the government has considered pausing the auto enrolment process for employees such as carers and nannies, according to a report on auto enrolment by the National Audit Office.

Under current auto enrolment, anyone who employs one person or more is subject to auto enrolment legislation and are obliged to enrol them into an occupational pension scheme. Because many nannies and carers are employed by individuals, it means that as well as businesses being subject to auto enrolment, so to are many individuals across the country.

Auto enrolment is currently rolling out, and the country's large and medium sized businesses have auto enrolled with very little fuss or problems. However, the next three years will see small and micro businesses auto enrol, and this may not be as straightforward. Unlike large businesses, many small and micro employers do not have edicated finance and payroll functions who have the time and expertise to deal with issues such as auto enrolment. Families and individuals who employ nannies and carers will almost certainly not have the knowledge or expertise.

It is for this reason that the government have made contingency plans that could be implemented to pause auto enrolment if it was seen that the program could not cope with the increased demand or a significant change of behaviour. The National Audit Office's report states:

"The Department for Work and Pensions (DWP) is now rolling out automatic enrolment to small employers, who pose new challenges for the programme. The profile of employers affected by automatic enrolment is now changing dramatically. Small employers are expected to have different requirements and responses to automatic enrolment. They will also create greater operational challenges as volumes increase."

It must be understood that this is not a 'plan of action' but rather a sensible precaution. Chances of this happening are slim, but it is a precaution that is sensible and it could rescue the auto enrolment process if there was a dramatic shift in demand or behaviour over the coming three years.

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