Will 2016 See Widespread Auto Enrolment Chaos?

1 December 2015

Will 2016 See Widespread Auto Enrolment Chaos? Senior payroll professionals from the Chartered Institute of Payroll Professionals (CIPP) suggest that there could be widespread non-compliance for auto enrolment in 2016 as more and more small and micro businesses reach their staging deadlines.

Meeting in London last week at the Chartered Institute of Payroll Professional's 'Capacity Crunch' conference, 82% of those payroll professionals attending thought that over 80% of micro and small businesses will not be at the stage to meet their auto enrolment obligations when due to stage in 2016.

A ticking timebomb?

Even if we don't see widespread non-compliance, it doesn't mean that the road ahead for auto enrolment is clear and simple. What the industry could be looking at in 2016 and onwards is what is known as a 'triple capacity crunch'. More and more small and micro businesses will be finding their staging dates kicking in, with the numbers expected to increase elevenfold from 46,000 this year to over 500,000 in 2016. This could seriously threaten the capacity of three important stakeholders in the whole process.

  • Pension providers
  • The Pensions Regulator
  • Business advisors

The sheer numbers involved in auto enrolment in 2016 and onwards represents a real risk for all three of these stakeholders, and could see one or more of them struggle with the demands that auto enrolment will place upon them from small and micro employers. This is especially relevant when one considers that the total number of employers to stage between now and 2018 is 1.3 million according to the Centre for Economics and Business Research, although more recent research has questioned these figures and put the figure at more than 1.8 million.

The advice is clear to any small or micro employer that is due to stage. Start taking action now, even if that means simply making themselves aware of the process and what their obligations are. If there is a sudden last minute rush for advice and guidance, pension providers, advisors and even the regulator itself may be over capacity and employers could find themselves facing fines for non-compliance.

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