As we approach the fourth anniversary of auto enrolment, it seems that smaller employers are, for the most part, smoothly adapting to providing workplace pensions. However, some small businesses are struggling with some aspects of how auto enrolment works.
To help make sure you don’t get caught out by the common auto enrolment problems, we asked Paul Budgen of NEST, which has been set up by the government especially for auto enrolment, to share his advice on the five auto enrolment issues that business owners are asking about.
1. Not knowing where to start
One of the most common questions I used to get asked was what do I do first?
Auto enrolment can be daunting, especially if you are one of the 83 per cent of small employers who’ve never offered a company pension before. Just because it’s unfamiliar, it doesn’t have to be challenging.
To make a start, it’s important to know your staging date. This is the date you’re required by law to enrol your workers into a workplace pension scheme. The Pensions Regulator (TPR) tells you when your staging date is and if you need to check you can do so on TPR’s website.
The site also has a host of useful guides and information for employers, so if you’re at the start of the auto enrolment process, or just need extra information, it’s definitely worth visiting.
2. Not knowing which pension provider to choose
Having never offered a pension before, how do business owners and small employers know what a good automatic enrolment pension provider looks like?
Well, a good resource to help you find a good quality employee pension scheme is The Pension Quality Mark (PQM) from The Pensions and Lifetime Saving Association (PLSA). The PQM provides an independent assessment of pension schemes, and their PQM READY status shows that a scheme meets their high standards. The PLSA publish a list of pension schemes that have achieved PQM READY status here.
These standards include having good governance, low charges and clear member communications. If you choose one of these schemes as your automatic enrolment pension provider, then you only have to pass the contributions element of the PLSA assessment process to be awarded a Pension Quality Mark yourself. This means you can then demonstrate the benefits of your scheme to your workers.
If your auto enrolment scheme provider is a master trust, you can check whether they have published a master trust assurance framework (MAF) report. A MAF report demonstrates that a master trust is meeting certain standards of administration and governance. There’s a list of accredited master trusts published by TPR.
Governance is important as there’s a well-recognised relationship between good governance equating to a good pension and member outcomes.
You can find more help on choosing a good provider in 5 things to consider when choosing a pension scheme for your workers.
3. Being turned down by a pension provider
Some smaller employers are discovering that the pension provider they had in mind will not accept their business, or could only enrol some of their workers.
In 2015 NEST found out that 35 per cent of NEST’s customers said other pension providers had been unwilling to enrol their entire workforce. If this happens to you, then remember NEST was set up by government to ensure all employers could access a high quality workplace pension scheme, no matter what their size.
4. Finding time for the added admin
Many small business owners already wear lots of hats, they are the director, procurement, sales, marketing, HR and payroll functions in their business and now they need to do pensions too?
We know that back when auto enrolment pensions were announced some questioned how easy it would be for smaller employers, and the intermediaries who help them, to make time for another potentially complex process.
To help flatten out the learning curve and save time when it comes to processing pensions, NEST looked to understand how the process of managing an auto enrolment pension could fit naturally into small businesses’ existing admin work.
We found out, for example, that around two thirds of small employers were experienced in dealing with payroll issues while less than a quarter were experienced in dealing with pension issues. Knowing this, we developed NEST web services, a package that makes setting up an auto enrolment pension scheme, enrolling members and paying contributions possible direct from your payroll software.
5. Getting the communications right
I know that in many smaller companies, business communications is direct, personal and perhaps normally done over a cup of tea. That’s one of the best things about working in a small team. However, auto enrolment has clear rules about how you should communicate with workers.
It’s important to remember you have a responsibility to provide your workers with some form of written communication detailing their new pension. An informal chat, even if that’s how you normally talk, isn’t appropriate here. It’s actually to everyone’s benefit if the communication is clear and takes place at an early stage of the process, so any snags can be ironed out.
To help you communicate everything about your auto enrolment scheme to your staff properly there are free templates on the NEST website. The templates will help you get the key messages across to your workers simply, and will also ensure you comply with auto enrolment legislation.
So those were the top five issues that small businesses talk to me about, but this isn’t an attempt to create comprehensive list.
About the author
This article has been written forByteStart by Paul Budgen, Director of Business Development of NEST. If you need further help with auto enrolment, or you just want to find out more about NEST’s scheme, there’s lots of information on the NEST website.
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